Bitcoin, Gold and Coronavirus

As global stock market indices fall, Bitcoin and the cryptocurrency market have risen starkly along with gold. This is a demonstration that gold, Bitcoin and cash are all essential components of your investment portfolio.

The spread of the novel coronavirus is a tragic global event. It is a "black swan", and the markets reacted to the evolving situation. The DOW fell 450 points, and the DJIA fell 1.6%, making this one of the worst days of loss for the markets in the past year. The fear of Chinese production reductions due to the spread of the virus rocked Asian markets, as China contributes almost 20% to world GDP numbers. The global markets are interconnected, and disruption anywhere can cause massive loss of capital everywhere.

The inverse relationship further cements Bitcoin and the cryptocurrency market as "safe-haven assets". Bitcoin spiked above $9,000 on Monday as global stock markets fell, and the DJIA fell almost 2%. The relationship was noticeably inverse, and stocks with exposure to Chinese markets were shaken. Bitcoin has yet to experience a recession, as it was created during the Great Recession of 2009 and has subsequently outperformed the markets during its rapid adoption.

Bitcoin has been lauded for its status as "digital gold", and the purpose of holding safe-haven assets including cash, gold and Bitcoin is to avoid loss and preserve wealth during downturns. China is the World's second largesteconomy, and disruption to its operations including quarantine of production facilities could reduce global output. As previously stated, China's GDP is almost 20% of the World's GDP and reductions in output could swing the world's stock markets to the red. Bitcoin's status as a safe-haven asset is derived from its deflationary supply and its status as an alternative asset with real technological value.

This scenario is further evidence that Bitcoin is digital gold. The deflationary aspect and alternative asset value makes Bitcoin and gold worthy additions to your portfolio. My recommendation is to add to your holdings as markets recover and Bitcoin pulls back in the short-term.

Originally published in my Publish0x account I own at:

https://www.publish0x.com/introducing-myself-on-publish0x-wstanley224/bitcoin-gold-and-coronavirus-xoyxvn

Also published in my Weku and Steemit accounts I own.

Picture from Pixabay.

https://www.cnbc.com/2020/01/28/analyst-markets-are-too-complacent-over-lehman-type-coronavirus-risks.html

https://coinmarketcap.com/

https://www.nytimes.com/2020/01/28/business/coronavirus-financial-markets.html