Are traders losing confidence in Bitcoin? Let's find out here

The swirling fall of bitcoin is bringing the currency to its knees, and many admit that they are losing confidence in this asset, along with the sector it belongs to. At the time of this writing, bitcoin has somehow managed to stabilize and is trading around $ 5,000. This is, of course, a huge drop from last month, when it was trading for over $ 10,300.

What has happened to Bitcoin in the past week

The global coronavirus pandemic has plunged US and international markets to historic lows. Bitcoin traded for around $ 8,700 about a week ago, but the drop started on Sunday, and before we even figured out what was going on, bitcoin had fallen to the $ 7,000 average range, losing much of its earnings by 2020.

A few days later, it was trading in the low $ 6,000 range and now – at least for the moment – seems to have stabilized around $ 5,000. The current Bitcoin price, however low, still represents a slight recovery compared to the $ 3,000 threshold that it touched about 48 hours ago.

Some users question Bitcoin's capabilities

Mike Novogratz – a bitcoin bull and hedge fund manager – says that this situation is leading many to wonder if bitcoin has ever qualified as a "safe haven" and believes that a large chunk of users are starting to lose faith in cryptocurrencies.

Novogratz explains: "[Bitcoin] it has always been a game of trust. The whole crypto world is. But now it seems that global trust in almost everything has evaporated. " To be honest, however, it is not fair to simply point the finger at bitcoin and label it as the only failed resource in the financial space.

Traditional stocks have also been hit hard, with the Dow Jones falling several thousand points in the past few days. Yesterday, it began to show signs of recovery and rose by 2,000 points after President Donald Trump declared the coronavirus a national emergency, but markets are still stuck in a critical position.

This is the last test

Jean-Marie Mognetti – CEO of Coin Shares – believes that this is part of a larger test for bitcoin and believes that this will be the right time to show its resilience and durability.

In an interview he explained: "We are witnessing a global revaluation that affects everything – from oil, stocks, bonds, treasury bonds and yes – even to bitcoin. We believe that bitcoin is a risk-off asset temporarily traded as a risk-on asset, as is happening for other assets that have historically been considered risk-offs and are now traded in legacy markets.

The months and years to come, considering the current context of negative interest rates and significant levels of quantitative easing worldwide, will be the true test of bitcoin.