AvaTrade Describe Bitcoin as “Safe Haven” From Market Turmoil

AvaTrade Describe Bitcoin as “Safe Haven” From Market Turmoil

After a disastrous week for investment following the huge sell-offs in crucial international markets due to growing coronavirus concern, many are concerned about trading in this current climate. However, Avatrade is arguing the contrary and see the current situation as an opportunity for investors.

They had already shared this belief earlier this week when they also described the sell-off as an overreaction on investors’ part. While they alluded to the possibility that the current situation could be beneficial for those who dare to go against the market, they did not fully substantiate these claims. However, in their latest blog post that shared just a few hours ago, they have been clearer about the specifics about what is a good opportunity, specifically in regards to the leading cryptocurrency asset, bitcoin.

As per Avatrade, their earlier estimations about the market overreacting to the Coronavirus have been so far substantiated by the value of gold in relation to the equity market. Notably, that while many of the leading equity markets have suffered and indices, such as the Down Jones, the FTSE 100, the DAX, the Nikkei and the Hang Seng, have seen drops of 10% gold will end the week in negative territory.

This means that threats of a recession from the Coronavirus are essentially fake news and that the world is not coming to an end. Although the global supply chain will continue to suffer for now. On the contrary to popular belief, Avatrade has described the sell-off as “healthy” and has essentially come from bears on the market attempting to find a way to secure correction after a long period of bullish markets.

What does this mean for traders then? Well, in their own words, “investors should consider the sell-off as an opportunity to bag top stocks at a much deeper discount. Having said this, there is no need to rush, because we are still nowhere near the bottom, the equity markets are likely to remain jittery for a prolonged time.”  Essentially, there is no need to panic buy or sell right now.

Gold and Bitcoin

The two peculiarities in regard to this are gold and bitcoin. Gold should be reflecting the current financial market and so, in theory, would increase in value. However, this has not been the case and this is because it is yet to affect the corporate default rate. Only when the influence of the supply chains disruption effects will there be an increase in gold’s value and so this may cause certain alarm bells to start ringing. As such, this is the asset you want to watch out for as where that goes could mean that you should start thinking about your investments.

One such investment that is looking like a good one if this does happen is bitcoin – which AvaTrade describes as a “safe haven”. This is in accordance with what we mentioned a couple of weeks ago as due to it being secular in its behaviour compared to other currencies, it is essentially immune to any of the traditional market’s behaviours. So far the asset has barely moved at all reflective of what is going on elsewhere and this is likely a result of the risky situation for everyone, crypto investors and otherwise, so despite seeing good growth in recent weeks, it has stagnated.

However, if the coronavirus crises continue then this will affect the price for the better, most likely. As traders will be looking to put their money in more secure places. The price of bitcoin will particularly increase if big countries put sanctions on smaller ones if the past form of the leading crypto asset holds true.

Go to Avatrade to start benefiting from the market!

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