Bitcoin, Virus, and Stocks

As stock markets worldwide sell off based on coronavirus concerns, it’s worth keeping the following in perspective

Bitcoin Is Not A Pandemic Hedge

Bitcoin is not a hedge against pandemics, it's a risk asset and a hedge against bad monetary policy. In crisis times, risk assets tend to sell off and treasury bonds tend to outperform

This is Not The First Pandemic

We’ve had pandemics in the past, notably in 1918 and 1957–58

Financial markets tend to recover from these pandemics, as virus recedes and economic activity resumes. S&P 500 went up over 5x following the 1918 pandemic, according to data from Shiller: http://www.econ.yale.edu/~shiller/data.htm. S&P 500 equivalent on Jan 1st 1918 was 1444.93, while 10 years later it was 7787.50. And 1957-1967 saw growth of 2x in the S&P 500.

Bitcoin Held Up Well

Despite the fact that bitcoin is a risk asset, it has held its value reasonably well between Dec 2019 (7400 on Dec 9th 2019), when the virus started, and March 11th (7900). Meanwhile, the S&P 500 was down over 10%.

Keep Calm and Carry On

Investors should keep a level head and not overreact to short term market gyrations. And when others panic, opportunities can arise.

Cove Logo Get Started