Whether you’re a Bitcoin follower, a gold investor, or a puncher attentive to the slightest thrill of Wall Street, the week we’ve just lived will forever be remembered. In a few decades, I even bet that it will have a special place in story books. Everyone will remember that it was during this week, which started on March 9, 2020, that the great economic crisis expected for years started finally. Boosted by ever-lower interest rates and massive cash injections, the artificial growth of the financial markets could not last forever as some Wall Street traders and other financial centers around the world hoped.
This utopia ended, and it was ultimately the coronavirus that played the role of catalyst in the collapse of the financial markets. Initiated by Saudi Arabia, the oil crisis has only accelerated the strongly bearish movement we have witnessed.
In this context, fear and panic have taken hold of a majority of people. During this week, the biggest challenge for most people has been to recover as much cash as possible.
Widespread collapse of liquid markets
This liquidity crisis therefore led to the collapse of all liquid markets. Already falling a month ago, the fall of the Dow Jones on Wall Street accelerated sharply over the weekend:
A fall of more than 15% took place between March 10 and March 12.
All investors obviously panic before such a fall. It must be said that they have long believed in the utopia of infinite growth financial markets. The return to reality is therefore extremely hard.
Over the same period, the S&P 500 undergoes the same correction:
Safe haven in times of crisis recognized for centuries, gold has not been spared. The precious metal is a liquid market. As such, he could not escape this liquidity crisis.
During this week, gold has lost almost 10% of its value.
Much newer than gold or the stock market, Bitcoin is nonetheless a liquid market par excellence.
Bitcoin was therefore strongly impacted by this widespread panic linked to the spread of the coronavirus, and to the risks of shutdown of the main world economies.
The fall had started on March 8, 2020 for Bitcoin. It then accelerated during the week with a real panic on March 12, 2020 seeing the price of Bitcoin collapse from $ 8K to $ 3.8K:
In a few hours, Bitcoin lost 50% of its price, before rebounding to see its price increase by + 50%. This very strong rebound in the price of Bitcoin is an excellent thing for the future, and proof that the confidence around Bitcoin remains intact.
In a panic, trade was suspended on Wall Street
In the midst of panic, many stock markets around the world decided to stop trading for several minutes. These interruptions having been decided on several occasions.
Obviously, Wall Street acted the same way. Thus, as soon as the market drops by 7% during the same day, trading is interrupted for 15 minutes. If the fall accelerates after the resumption of trade to reach -13%, a new interruption is decided.
Finally, if the fall is 20% in the same day, the exchanges are ended for the day. These measures were created to protect investors if you believe what the powerful say at the head of this system.
If you are like me, you should ask yourself the following question:
Is Wall Street’s mode of functioning really that of a free market as described by the doctrines of capitalism?
The answer is clearly no. Wall Street actually acts rather to protect the interests of the powerful at the head of the system.
Let’s compare for a moment with Bitcoin. Bitcoin works 365 days a year, 7 days a week, and 24 hours a day. This is already a first size difference with Wall Street, and the other financial markets.
When the price of Bitcoin lost 50% in a few hours on March 12, 2020, trading was never interrupted.
Bitcoin market participants were able to freely continue to trade their Bitcoins in order to find a break-even price. This breakeven price was finally found around $ 5K after an increase of around 30% in the price of Bitcoin from its lowest point a few hours earlier.
Recognized trader in the world of traditional finance, Dan Tapiero is also a staunch defender of the benefits of Bitcoin.
Here is one of his tweets in the heart of the panic on the Bitcoin market:
Dan Tapiero makes no mistake when he says that the Bitcoin is the only real free market in the world.
Whatever happens, trading continues to let the market decide the equilibrium price. Bitcoin fully respects the theories of capitalism. This is not the case with Wall Street, whose practices are even close to socialism.
Wall Street calls for help to the Federal Reserve
In the midst of panic this week, Wall Street traders kept asking the intervention of the Federal Reserve to support a market full of ultra-fragile assets.
As a reminder, the Federal Reserve had already taken a historic decision on March 3, 2020 by lowering 50 basis points interest rates with a target of 1% to 1.25%.
This decrease was decided unanimously to support the American economy in anticipation of the arrival of the coronavirus. For 20 years, such a decline had only been decided on two occasions: after September 11, 2001, and after the financial crisis of 2008.
This drop in interest rates should favor a policy of quantitative easing on the part of the Federal Reserve with a significant injection of liquidity.
However, Wall Street is so used to this type of monetary stimulus that it obviously did not find it sufficient. The financial markets still collapsed.
Donald Trump continued to put pressure on the Federal Reserve by calling for a further cut in interest rates, targeting zero rates. The goal is to align with Europe and its negative interest rates at -0.50%.
At the height of the downturn in the financial markets on March 12, 2020, the Federal Reserve then announced an injection of liquidity to come of $ 1.5T. The markets reacted for some time, before finally continuing to descend.
Many on Wall Street are calling for even more liquidity from the Federal Reserve.
Wall Street has become so addicted to this stimulus that creation is monetary that he always wants more. This abuse makes the effects less and less tangible, while devaluing what everyone has.
When I say everyone, I think first of all of the less wealthy, because they are the ones that are most affected by the arbitrary decisions of a few powerful people at the head of a failing system.
The Federal Reserve should therefore continue its support work via its favorite recipe in the days and weeks to come: lower interest rates, and more money creation. The markets will force it.
On mid-day March 13, 2020, Donald Trump decreed the state of national emergency in the USA.
This announcement, coupled with the possible future decisions of the Federal Reserve that Wall Street claims, has apparently convinced certain investors who found a certain optimism at the end of the week.
The situation remains precarious, and the week ahead is also going to be extremely tense.
Bitcoin is the only real free market in the world
This economic crisis we are entering is highlighting that the Bitcoin is the only real free market in the world. Bitcoin works continuously, and nothing can stop adding new blocks to its Blockchain.
Its price is very volatile but it is only because it allows the users of its market to find the true balance point.
Bitcoin market capitalization lost more than $ 60 billion in this dark week. However, you have not seen any Bitcoiners come to cry for request the intervention of any central bank.
Bitcoiners are used to this volatility, and they know to see in these big drops of Bitcoin, an opportunity to buy more Bitcoins to prepare for a better future.
Everyone panics, but Bitcoiners see an opportunity, and can be greedy at the best of times.
Many investors in the traditional finance world, led by Wall Street, don’t even know how to manage risk as they should. The stocks they buy on the market are for the most part extremely fragile, but they prefer to believe in a system that promises them infinite growth.
This is just a utopia.
As with all utopias, getting back to reality is difficult. This is exactly what is happening to them. Contrary to what they think, the extreme volatility of Bitcoin’s price is a good thing because it is proof that its market is completely free.
The coming weeks and months will highlight Bitcoin’s superiority over Wall Street and other financial markets, I am sure.
To take advantage of it, however, you will need to be able to have a fairly solid kidney, but also to have real confidence in the laws of the market that Bitcoin represents better than anyone.
It’s up to you to find out if you can, and to make your decision. We Bitcoiners have already taken ours.
A developer by training, I discovered Bitcoin in 2014 but I did not immediately understand the importance it could have for the world of tomorrow. I got into it more deeply from the start of 2017 and since then I haven’t given up on the business.
Passionate about Bitcoin and the new system it is trying to build for the future, I decided to participate in its evangelism at my modest level by writing on Bitcoin, Blockchain and crypto currencies on different supports.
It is with pleasure that I publish some of my texts in French on The Coin Tribune.
I also write a lot about personal development and self-improvement.
Do not hesitate to exchange with me via social networks or in comments on my articles if you have questions about my articles.