Stocks have gone off a cliff in the past two weeks, reeling from the rapid global spread of coronavirus. The Fed has made two emergency cuts in the shortest time period it has ever done so, cutting rates to near zero. Last Thursday was the worst day for stocks since the Black Monday crash in October 1987. The S&P 500 is down 11% in the past five days, the Dow down 13% in that time, and the Nasdaq down 10%.
But bitcoin has fared even worse.
The leading cryptocurrency by market cap is down 30% in the past five days, and now down 50% in the past month. On Friday, bitcoin tanked 25% in just 24 hours, bringing it below $6,000 for the first time since May 2019, 10 months ago.
Bitcoin rose 87% in 2019, and it had been having a very strong 2020 until mid-February; now it’s down 30% for the year.
As of Monday at noon, bitcoin was hovering at $5,000.
“It is quite fascinating to watch how bad it’s performed,” said David Zervos, chief market strategist at Jefferies. “To see bitcoin off $1,400 in a day, that’s not going to give people a lot of confidence that it’s doing what it’s sort of marketed to do.”
The other largest cryptocurrencies aren’t doing any better amid the coronavirus rout: ether (ETH) is down 30% in the last five days, 56% in the last month; XRP (XRP) is down 25% in the past five days and 52% in the past month; bitcoin cash (BCH) is down 32% in the past five days and down 60% in the past month.
What happened to the idea of crypto as a safe haven asset, a hedge against economic uncertainty?
The best answer for now is that coronavirus, a so-called black swan event, has become such a massive shock to the global economy that basically every asset class is down, creating a risk-off environment in which crypto, already a notoriously risky investment, isn’t very attractive. Investors are hurriedly selling off stocks, and they’re not moving that cash into crypto.
On the other hand, gold has outperformed crypto in 2020, which has further dinged the “digital gold” theory for bitcoin. Even widely reported (ultimately incorrect) rumors that paper cash could transmit the virus did not boost the price of digital currencies.
Crypto bulls reman bullish. “I think these geopolitical events, including coronavirus and geopolitical tensions, really improve the use case,” Fundstrat’s Tom Lee told Yahoo Finance in February. “I think it’s a good time to look at crypto.”
Last week, Lee again reiterated, “In an environment where the stock market is in big trouble, crypto I think does make sense as a hedge.” The people furiously selling off their crypto do not appear to agree.
Bitcoin believers can still point to the fact that bitcoin is up big over a longer period of time: up 1,700% compared to five years ago. Still, because it kissed $20,000 per coin at the end of 2017, bitcoin—fairly or unfairly—still always gets compared to that all-time-high bar.
Daniel Roberts is an editor-at-large at Yahoo Finance and closely covers bitcoin and blockchain. Follow him on Twitter at @readDanwrite.