The price of Bitcoin has plunged to its lowest level in 11 months, endangering hopes that it can serve as a safe haven asset during the worsening coronavirus pandemic.
The cryptocurrency, whose advocates describe it as “digital gold”, fell as low as $4,832 per coin (£3,859) on Thursday according to CoinDesk, a 38pc drop from the previous 24 hours and a 53pc decline from the same time last month.
The sell-off accelerated rapidly following President Donald Trump’s announcement that the US would ban all incoming travel from continental Europe except for existing permanent residents.
By contrast, the price of one ounce of physical gold has risen by about 5pc over the past 24 hours and fallen by roughly 7pc over the course of a month, having advanced steadily by about 25pc over the past year.
It came as the FTSE 100 plummeted to its lowest level since 2012, with stock markets across the world being pummelled by the economic waves made by the exponential spread of Covid-19.
Arcane Research, a cryptocurrency market analysis firm, said in a note: “It looks like institutional traders are taking a break from Bitcoin in this unstable period, with growing fear related to the coronavirus.”
The company said that the sell-off was likely to be caused by stock market turmoil forcing traders to sell off liquid assets in order to keep their margin accounts above a certain level, with Bitcoin being an easy asset to shrug off.
Simon Peters, a market analyst at the online trading service eToro, told the Independent: “Previously seen as a possible safe haven in difficult times, investors now seem to be selling out to take back liquidity in case the coronavirus spreads even further. In a time of uncertainty, many investors might feel it is better to own cash or gold rather than more speculative cryptocurrencies like bitcoin.”
Bitcoin’s fans and boosters say that it is a better long-term store of value than precious metals because the mathematics that underlie the currency put an iron ceiling on the number of coins that can ever exist. But since its creation Bitcoin has been highly volatile, with enormous bubbles and price swings.
Anthony Pompliano, a well-known Bitcoin advocate, dismissed the sell-off as the short-term effect of “weak hands” panicking in a “liquidity crisis”, predicting that coronavirus-related fiscal stimulus from central banks would soon drive even more people to adopt the currency.