The most popular cryptocurrencies markets have been falling since the start of the week, putting into question their status as "safe haven" assets.
On Sunday, Bitcoin went up by 3.34 percent against the dollar, after posting small losses on the previous day. Conversely, Ethereum climbed 5.18 percent after dropping 1.24 percent on the previous session, a trend that also Ripple followed, gaining 3.06 percent against the dollar.
However, on Monday Bitcoin gave up most of the gains from the previous session, dropping 3.11 percent against the dollar, and the situation repeated itself on Tuesday, with Bitcoin losing territory against the dollar once again as it dropped 3.58 percent. Ethereum markets followed the same pattern, losing 3.54 percent on Monday, followed by a 7.08 percent drop during the next session, followed by the Ripple which went down 4.48 percent on Monday, followed by a 6.73 percent fall on Tuesday.
The coronavirus epidemic continues expanding across the world. Lately, several European countries announced their first cases, being Italy the most affected country with a death toll of 11 and more than 300 infections. In Asia, China keeps leading in terms of the number of infections and fatalities, with more than 78,000 reported infection cases and more than 2700 victims. The first potential Latin American case was already reported on Tuesday, a 61 year-old Brazilian resident who is being tested again to confirm the diagnosis.
Recently, World Health Organization experts warned that countries outside of China are simply not prepared for a pandemic after the organization itself called the rest of the world to prepare for such a situation.
“You have to be ready to manage this at a larger scale … and it has to be done fast,” said Bruce Aylward, the WHO-China mission.
In the United States, one of the top officials of the Centers for Disease Control echoed the WHO's warning, saying that it's not a question of whether this will happen or not, but when and how many are going to be affected.
The epidemic news has caused a capital outflow from assets markets, as it's already affecting the economic performance of the global economy, driving investors towards assets that they perceive as "safer".
Until now, it was often assumed that the cryptocurrencies markets have been immune to the coronavirus epidemic and that, at least in the long run, offer stability to investors in times of crisis. In fact, the Bitcoin is often compared to gold by its believers, which at the moment may be hard to sustain given that (unlike cryptocurrency markets) gold futures markets have remained in the positive territory insofar this week. This week’s surprising cryptocurrency movements call this theory into doubt.
In any case, it's too early to talk about a change in the market trend. At least regarding Bitcoin, even if the losing streak persists for some time, this negative turn may be short-lived given that the markets expect the upcoming Bitcoin halving, which is likely to occur in May 2020. It is also helpful to remember that despite the sudden losses the cryptocurrencies markets suffered this week, they have gained a lot of territory since the beginning of the year.