For those who may be unaware, or have been living under a rock, the past week, BTC has its third largest price drop in its history, falling down, 37.53% in a day. This was at the same time that the stock market took a historic beating in light of the coronavirus epidemic. 

The reactions where understandable, wasn’t Bitcoin suppose to be an uncorrelated asset? Was hodl-ing the answer to fiscal ruin during a time of crisis? A lot of left unanswered and  speculation and uncertainty is present in the Bitcoin world. That being said, this week on the Norwegian, Kryptografen podcast, crypto expert, Torbjørn Bull Jenssen, gave us a talk through. He explained what really happened on Friday the 13th, his predictions on the future and what this all means for Bitcoin. 

What the hell happened?

There are several theories as to what brought down Bitcoin on Friday. He means that a lot of the market makers in Bitcoin are also invested in the stock market. So when the stock market fell, people where liquidating their positions in Bitcoin to cover other loses. Bitcoin became a funding source for institutions playing different markets. 

Another big event that took place was that one miner, had found his 2010 password and dumped 1000 Bitcoin on the market at the time  of the crash. This is proven as the movement can be tracked. This could be an extremely poorly timed transaction. 

During the crash, Bitmex, also closed down for a period of time. Although they are not sure what the reason was, a few are guessing that it was over capacity on the server, others think that Bitmex intentionally closed so that the market could calm down. It begs to ask the question, what does this mean for the derivatives market?

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Torbjørn means that because exchanges such as Bitmex, flushed a lot of cash ‘down the drain’. People had to use their bitcoin as a collateral instrument. This means that the market has never been less liquid than it is today.

What’s next?

His prediction is that this correlation will not last. For one, there is not more than 21 million Bitcoins that can be mined. In may miner rewards will be halved. The feds are printing a lot of cash and slashing interest rates in order to prevent more damage from happening. More fiat, less bitcoin in the year ahead.

So the institutional players pulled out, now we are back to seeing that retail investors are back on top. With Bakkt completing their Series B funding with 300$ million dollars. This is just the start, Bitcoin can’t go bankrupt. That is to say, that the markets now are extremely volatile. Although we know that we will fly after this epidemic, we will not know if it it will be Norwegian Airlines. Bitcoin will always be. 

His last remaining thoughts included some stats. If you compare the Bitcoin down to Oslo Børs, Bitcoin is only down 27%, while Oslo Børs if measured in USD is down 41%, this is in regards to YTD, 2020. Looking historically, it is important to note that over the past five years, Bitcoin has gone up 33%,  while Oslo Børs has only gone up 4% in five years.

That being said, the Bitcoin narrative being uncorrelated is shuttered from this fall with the market. If it continues to follow the market, a lot of the appeal will be gone.

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