Bitcoin news this week: A black Thursday turns into a green Friday

Bitcoin has this week experienced levels of volatility not seen since the earlier years of last decade – dropping over 40 percent on March 12th before rebounding close to 50 percent on March 13th. The big movements matching the drama of the global stock markets over the last few weeks.

The question now posed is what caused the original crash and the subsequent rebound. Parallels will be drawn with markets such as the S&P 500, which also suffered one of its worst drops in history on the Thursday of this week.

But to deduce from this that Bitcoin has lost its safe haven narrative would be a mistake. Gold, the traditional commodity used as a haven from market instability also suffered drops of up to 4.5 percent, before closing around 1577$ – a 3.5 percent drop from open.

Perhaps then this could be seen as a global liquidity crunch – forcing market players to sell off not only their high-risk assets (bitcoin perhaps) but also their supposedly safe haven assets, such as gold, to cover their margin calls from the plummeting equity markets.

For this hypothesis to gain weight, Bitcoin would need to start moving towards new highs in the mid-future whilst the world squares up to not only the corona virus, but the havoc that it has begun to play on the global economy.

But what a turn-around! The drastic rebound of the cryptocurrency markets today is clearly evident of overselling when rationality all but evaporated from the bears, and something the market quickly absorbed overnight, UK time.

People who managed to get their bids filled at 3800$ will be sitting more comfortably than most, however they would be unwise to get complacent. As we know, all’s fair in love and Bitcoin.

The above is not investment advice.

Written by Max Worontschak, in-house crypto expert at Skrill