The cryptocurrency world – led by Bitcoin maximalists – is still contemplating the recent crash whereby BTC lost over 50% of its value in a day as the fears of COVID-19 spread across the world. The CEO of Galaxy Digital, Mike Novogratz, weighed in on the debate on what could have caused the crash – “market panic selling, not institutions selling,” he said.
Mike Novogratz on BTC crash to $3,600: “That was a leveraged washout”
On Mar. 12, the cryptocurrency world witnessed one of its largest drop in history as most of the top altcoins lost about 40% – 50% of their value in hours. A number of analysts have come forward stating the selloff may be mainly caused by institutions selling in light of the markets reacting to the Corona Virus epidemic.
Bitcoin educator, Jimmy Song, is one of the believers that institutions’ mass buying of BTC may have exposed the top currency to risks of a large selloff in such cases. He Tweets
Today proves that institutions buying Bitcoin has a flip side.
However, this may yet be a case of panic selling, similar to gold in 2009 as the world battled the global financial crisis.
Novogratz responded to Jimmy Song’s tweet claiming institutions could not have set the ball rolling on the flash crash of BTC. He tweets,
“That wasn’t institutions. That was a leveraged washout. Institutions aren’t fast enough to sell like that. That was panic selling from people who bought on margin.”
More comments on the BTC crash
Following the crash, the question on whether BTC is a safe asset has arisen once more as the top coin continued its volatile run through Mar. 13. According to managing Partner at BlockTower Capital, Ari David Paul, BTC is more of a backup when cash fails rather than in global epidemics. He writes on Twitter,
“During standard panics, *everything* sells off except cash. That’s because people want the stuff that lets them buy food and pay rent. Fear = everything falls except cash.”
BTC was no exception as it followed stocks and physical metals down the bearish path as the world battles against the COVID-19 virus. He concluded,
“BTC does well when people *fear cash* – when they fear inflation/depreciation.”