Key Points
- A week-long rout has wiped over $600 billion from the total crypto market value.
- Bitcoin has failed to act as a “safe-haven” asset, falling along with the rest of the market.
- The sell-off was triggered by escalating U.S.-China trade tensions and led to record liquidations.
- Technical glitches at the crypto exchange Binance made the crash even worse.
Bitcoin has once again failed to live up to its reputation as a “digital gold.” As the broader crypto market continues to get hammered, the original cryptocurrency has tumbled right along with it, proving to be a risky bet rather than a safe harbor in a storm.
After a brutal week that saw over $600 billion wiped from the total value of the crypto market, Bitcoin dropped again on Friday, hitting its lowest level since June. Ether, the second-largest token, has now fallen about 25% from its August peak.
The massive sell-off, which was triggered by escalating U.S.-China trade tensions, has exposed the risky leverage in the market. A record-breaking $19 billion in liquidations happened on October 10 and 11 alone. The crash was made worse by technical glitches at the world’s largest crypto exchange, Binance, which is now offering nearly $600 million in compensation to its customers.
While traditional safe-haven assets like gold and silver have been hitting new all-time highs, Bitcoin has disappointed. Its failure to act as a hedge against market turmoil is a major blow to one of the key arguments for holding the asset.
Instead of a safe haven, some analysts now see crypto as a “canary in the coal mine.” “More than anything, I think crypto is acting like a canary in the coal mine, suggesting the market is on edge because of emerging credit worries,” said Matthew Hougan of Bitwise.
