No Safe Haven: Bitcoin And Other Cryptos Plunge Along With Equities in the Face of the Coronavirus

As stock markets swoon in the face of the novel coronavirus outbreak and its effects, prices for cryptocurrencies like Bitcoin are sliding as well, disproving at least for now the idea that cryptos can serve as a so-called safe haven for investors.

Bitcoin, the leading digital currency, was trading at just shy of $4,912 at mid-morning Monday, down 8% over 24 hours and fully 37% across the past week. Bitcoin had been maintaining a price steadily above $7,000 until it began a sharp slide Thursday. Observers are attributing the coin’s quick descent to traders’ indiscriminate shedding of assets as broader equity markets drop. The Dow Industrial Average of 30 bellwether stocks had fallen 10% by midmorning Monday. 

Markets are reacting in part to moves by multiple state and local governments to stop or restrict gatherings that could allow the coronavirus to spread more readily. In one of the latest actions, the state of Illinois on Sunday ordered restaurants and bars to close, allowing only takeout and delivery orders starting Tuesday.

The continued selloff came despite moves by the Federal Reserve on Sunday to shore up the financial system. The regulator said it would cut the federal-funds rate, a key interest rate, by 1 percentage point to near zero. It also said it will buy $700 billion in Treasury and mortgage-backed securities.

Bitcoin isn’t alone among digital currencies in shedding value. All 10 of the largest cryptocoins are down over the past seven days, led by Tezos at 46% and Ethereum at 44%, according to CoinMarketCap.com. Bitcoin is by far the largest cryptocurrency, with a market capitalization exceeding $90 billion as of mid-morning Monday.

Bitcoin’s median transaction fee, however, has been somewhat less volatile over the past year. The fee stood at 58 cents Sunday and has remained under $1 since August, according to BitInfoCharts. Wild upward swings in this fee have been blamed in the past for hindering Bitcoin’s utility as a payment medium.