It's been an intense week, especially here in Silicon Valley, the first area of the US given 'shelter in place' orders. Why we were first hasn't been explained, but it's likely because of the amount of economic power in an area where Google, Apple, and Facebook employees live on the same street.
Since the Coronavirus pandemic took full effect, Bitcoin crashed down to the low $5000 and spent over a week floating around this zone.
Stocks performed the same, causing many to point out once again how the two markets often mirror each other, even though there's major fundamental differences.
Those differences may allow for a much easier recovery, as stocks continue to suffer, Bitcoin broke out with a 20% surge, peaking around $6900.
Read more on this in the Forbes article "Bitcoin Rally Leaves Stocks In The Dust".
With the initial shock of everything wearing off, I wanted to take a deep breath, followed by a rational look at where things stand, and where they could go next.
No Safe Haven In a Panic...
While some have used the last couple weeks as evidence against claims Bitcoin was a safe-haven asset, I have to say - I never thought we were talking about situations like this.
Rather, a safe haven for crashes like the one we saw in 2008, where bankers and Wall St abused the traditional finance system, and the public would then be asked to trust that the people who just destroyed the system would now turn around and fix it.
That situation (which describes most historical economic crashes) makes Bitcoin look pretty damn appealing, and I think we will see a lot of people turning to it the next time it happens.
But scare like a virus, with people panicking and seeking cash fast - they're going sell whatever gets them that cash.
I'm not sure why anyone ever thought that wouldn't include crypto.
I'll take it one step further and say - an asset immune to panic selling triggered by global pandemic does not exist.
Crypto May Be First To Recover...
When something major happens that causes investors to panic sell, it's no surprise both crypto and stocks take a hit.
But crashing together doesn't mean they need to recover together.
Recovery is a very different game for each. The stock market wants to hear about company profits, see earnings reports, and hear statements from CEO's about their path forward.
The decentralized nature of cryptocurrency means the traders and investors alone can drive recovery - we're not waiting to hear from any person or company.
There's no "CEO Of Crypto Inc" putting out statements for the media to pick apart - for or better or worse, we're on our own.
Currently it seems to be for the better, but keep in mind this is a double edged sword - for example, we'll never see a bailout for the crypto industry, or a coin considered "too big to fail" and government stepping in to save it.
What To Watch For Next...
What happens in the US will determine what happens next in the market.
The panic has is gone, but people are still on edge - there's two very different possibilities.
The best case scenario - we continue as-is for the next few months. Cases of the virus popping up at a pace they can be dealt with, eventually ending with a vaccine or some other viable treatment that officially puts an end to the whole thing.
The worst case scenario - as you know people can carry the virus for weeks without feeling ill, and during this time they can spread it to others. It was just a week ago where people were still gathering in large crowds - Las Vegas for example just went dark days ago.
There could be a massive number of people infected who currently don't know it. Not saying there is, just saying it's possible.
So we now enter a phase that could last for 1 to 2 weeks, of waiting to find out which scenario is real.
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Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco News Desk
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