Bitcoin, a safe haven? clues are there for Coinbase

Credit: Bitcoin – Pixabay

The fall of cryptocurrencies, including Bitcoin, March 12 did not scare away customers. According to Coinbase, in 48 hours, the number of new users was doubled. Deposits also increased very significantly.

Faced with a crisis, buyers leave the ship en masse. This is what the plunge in cryptocurrency prices from March 12 might suggest. But according to Coinbase, user behavior is actually more complex.

A crisis was an opportunity to confirm or not the safe haven potential of Bitcoin. "(…) Despite a widely held belief that Bitcoin is an uncorrelated asset, the bitcoin market has still collapsed by 50%" recognizes Coinbase

Losses that affected all liquid markets

So the proof of a failed test for cryptocurrency? According to the company, this drop should be placed in a broader context, with in particular the outbreak of a liquidity crisis.

In those moments, investors don't sell what they want to sell, they sell what they can. That includes bitcoins and other cryptocurrencies, but all liquid markets suffered heavy losses on March 12, "considers Coinbase.

Bitcoin has not escaped the rule. So, short-term and institutional speculators have sold. Similarly, “some leveraged positions had to be closed. And if the fall was harder and faster for Bitcoin, the "essential" reason would be "the size and extent of leverage in the bitcoin industry." "

Coinbase users going against the grain

Coinbase observe moreover that the cascading liquidations were particularly important on BitMEX, which offers products with high leverage. The platform notes other behavior on its service.

It even evokes a record activity, and not only to liquidate its assets in a context of crisis. In the 48 hours following the fall in prices, Coinbase notably points out that the purchases in cash and deposit in crypto were multiplied by 5 (or $ 1.3 billion in total).

But the service also announces a doubling of new registrations, tripling of trading users and multiplying by six the total volume traded.

Her conclusion : "The customers of our retail brokerage were buyers during the fall, and Bitcoin was the big favorite. "

Our customers typically buy 60% more than they sell, but during the crash, that figure jumped to 67%, taking advantage of market lows and representing high demand for crypto assets, even in extreme volatility, ” continues the platform.

Bitcoin on the gold trajectory?

Over this 48 hour period, the Bitcoin has emerged as the most sought after asset among users, accounting for more than half of total deposits and exchanges. Ethereum and XRP registered “increasing success”, ranking respectively 2^e and 3^e behind Bitcoin.

For Coinbase, if Bitcoin was not spared at the start of the financial crisis triggered by the Covid-19, "Bitcoin was created for a time like this".

Gold first fell more than 30%. Not because it's a bad store of value, but because a similar liquidity crisis has affected gold just as well. The gold was then multiplied by three over the next three years, its value standing out in the general financial turmoil, "concludes the Californian broker.