Human beings are complex, and our behavior cannot always be predicted. Imagine then trying to analyze and predict the behavior of all the people who make up the markets. Sometimes volatility can reign, especially in markets like Bitcoin, to the point where it seems advisable to find a psychoanalyst for them.
We are all crazy
They have been extremely hard days for world markets. With major collapses on the New York Stock Exchange on Mondays, Tuesdays and Thursdays. Followed by the derailment of the European stock markets and the main assets such as gold, oil and even Bitcoin.
It all started with oil, related to the decrease in economic activity generated by the Coronavirus. Disease for which the only measure of protection is quarantine, and therefore prevents workers from getting to their jobs. It announced a significant reduction in energy demand worldwide, reflected in oil prices.
Given this situation, the OPEC countries, led by Saudi Arabia, asked the non-OPEC oil-producing countries, and especially Russia, for a concerted reduction in global production. In order to decrease the supply of crude oil, and therefore protect the prices of the oil barrel.
However, this proposal failed to convince Russia, a country that broke off the negotiations. Saudi Arabia immediately took action against Russia, reducing the price at which it sells its oil, announcing an increase in production.
These actions caused the oil price to collapse by more than 30%. What ended up being transmitted to the international financial market, including Bitcoin, leading to the collapse of all the major exchanges in the world. Since then, they have not been able to recover.
Bitcoin is also crazy
But if this collapse of traditional markets seems worrisome, the fall in value reserve assets is even more so. Well, gold, silver, and Bitcoin, assets that in theory should remain firm and strengthen during times of uncertainty and recession, this time are also in free fall.
Thus, in just one day, gold, the quintessential asset value reserve, has lost 4% of its value. Defying classical economic knowledge, which tells us that at this time, capitals should resort massively to value reserve assets such as gold, to protect themselves from the collapse in the stock market.
Something similar to what happens in the Bitcoin market. With the difference that, being a smaller and less consolidated market than that of gold, the fall of the cryptocurrency has been much worse. Going from black Monday, when the market collapse began, until today from $ 8,754 per BTC to $ 5,797.
Although everyone in the market knows the cause of the ups and downs in the international financial market, where the Coronavirus is the main culprit in the collapse. In the case of Bitcoin, and in general among value reserve assets, it is difficult to explain why they have reacted the way they have. Being at the end of the day, one of those acts that only a psychoanalyst could explain.