- Despite the devastating crash on the crypto market, there are good reasons to HODL Bitcoin.
- CNF has compiled five reasons why Bitcoin HODLer should continue to not lose confidence in the cryptocurrency.
The spread of the coronavirus and the resulting panic continue to dominate the global financial markets and the cryptocurrency market. Yesterday, the Dow Jones experienced its biggest drop in price since the Black Monday of 1987, while Bitcoin (BTC) also suffered its biggest loss in a single day since December 2013. As a result, most Bitcoin HODLers are currently experiencing probably the most difficult time they have ever had to go through.
As Glassnode’s statistics show, the relative UTXOs in profit have fallen to a 3-year low. Only 44.7% of all UTXOs are still in the profit zone. The previous 3-year low was recorded on February 7, 2019, and was 44.8%.
5 reasons for Bitcoin HODLer to remain strong
For many Bitcoin investors, it is certainly absolutely disappointing to see Bitcoin crashing in line with the traditional financial market. The thesis of Bitcoin as a “safe haven” in times of crisis has thus not been confirmed, although Satoshi Nakamoto designed Bitcoin in 2008 as a hedge against financial crises. Nevertheless, there are good reasons to continue to hold on to Bitcoin.
First and foremost, it should be noted that the coronavirus is not only a financial crisis, as in 2008, but also a health crisis that potentially threatens millions of people. The outbreak of the coronavirus is also described by many experts as a “black swan”, an event that occurs beyond the fundamentals of a financial instrument. Since Bitcoin needs financially and physically healthy people, the influence of the coronavirus on Bitcoin seems a logical consequence.
A second reason why Bitcoin investors should be reassured is that not only Bitcoin, but the entire financial market is in the red. Investors are not currently questioning Bitcoin as a whole. In a financial crisis, investors sell all their funds in order to flee into cash as liquid asset. Jack Mallers, founder of Bitcoin Lightning Wallet Zap pointed out this connection and explained:
For many, cash is disappearing. The world is very illiquid right now. Bitcoin’s generational performance is a rainy day fund for some. I’m hearing many popular (non-crypto) hedge funds are completely blown out and traders are being told to close down their positions. They need cash. This is the reason Gold is down as well.BTC is still a tad bit too young to absorb such a global liquidity crisis without pain
Bitcoin investors are buying the dip
As discussed in an earlier post, the coronavirus also represents an opportunity for a rising Bitcoin price. The whole financial system has a certain stake in the current situation. The central banking system has been printing money incessantly over the last few years, which on the one hand puts the economic system on a shaky foundation. In the event of a “real” economic crisis caused by the coronavirus, the big moment for Bitcoin could come.
A fourth reason to be optimistic is that the number of Bitcoin addresses with a balance greater than 1 BTC has currently reached a peak. Thanks to the “black swan” corona, Bitcoin is more affordable than it has been for a long time for normal investors.
Even Edward Snowden wrote today on Twitter that today is the first time in a long time that he feels like buying Bitcoin. According to Snowden, too much panic and too little reason are involved in the current crypto crash.
This is the first time in a while I've felt like buying bitcoin. That drop was too much panic and too little reason.
— Edward Snowden (@Snowden) March 13, 2020
A final, fifth reason to be optimistic is the order book behavior of users today. As Nathaniel Whittemore noted in his daily podcast “The Breakdown”, 72% of today’s orders on Coinbase are buy orders, which shows that the confidence of average investors in Bitcoin is still there.
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