In recent weeks Bitcoin got refuge designation, but it started losing it rapidly as the largest crypto joins the global slide in riskier assets.
After rallying while U.S. investments fell earlier in the month, Bitcoin has followed stocks lower, with the digital asset plunging about 14% this week to push its price to around $10,200. The token, which last traded below $10,000 on Aug. 1, had soared as high as $13,852 on June 26.
A chief investment officer of Arca, a Los Angeles-based asset manager Jeff Dorman said: “Predictably and rationally, Bitcoin gave back much of last week’s increases, and now sits right back where we began”.
Advocates had been naming the increased negative correlation with U.S. equities as proof that investors were turning to Bitcoin as a haven. That narrative is unravelling this week as the inverse relationship erodes.
“It’s of course not practical to believe that every participant in global risk markets is using Bitcoin as a hedge or a flight to quality, and they are therefore not selling BTC when markets go back to ‘risk-on’. But since the coin is such a small asset relative to the rest of the markets, it doesn’t take much to push Bitcoin one way or the other” Dorman said.