Global financial turmoil puts pressure on Bitcoin, questioning its safe-haven properties.

March 9, 2020, will undoubtedly be recorded in the annals of financial history.

After the "Black Monday" of the US stock market in 1987, the United States began to implement a stock market circuit breaker mechanism. In the decades that followed, this mechanism was only triggered for the first time on October 27, 1997, when the Dow Jones Industrial Average fell by 7.18%, marking the largest single-day decline since 1915.

However, under the impact of multiple factors such as the spread of the COVID-19 pandemic, the U.S. presidential primaries, and the plummet of crude oil prices, the U.S. stock market crashed again on March 9, 2020, triggering the circuit breaker mechanism for the second time in history, leading to turbulence in global stock markets.

At the same time, the cryptocurrency market has not been spared. The price of Bitcoin, known as "digital gold," plummeted from $9,170 to $7,680, breaking through the two key support levels of $8,000 and $7,800 in succession, with a decline of nearly 20% within two days. The liquidation amount of contracts on several major trading platforms reached nearly $700 million.

Most investment institutions believe that the sharp decline in US stocks is the result of multiple factors, including the COVID-19 virus, the Middle East oil price war, and the US election primaries. It is worth noting that prior to this drop, the global financial markets were already experiencing a lack of liquidity, and market performance was below expectations. In fact, market funds are not as abundant as imagined, and coupled with the presence of significant leverage, it is easy to trigger liquidity issues.

The synchronized decline of global financial markets has intensified investors' demand for safe-haven assets. Panic has driven more people to sell stocks and withdraw from the commodity futures market, with funds gradually flowing into traditional safe-haven assets such as gold, cash, and government bonds.

In the blockchain industry, Bitcoin was once regarded as an asset with significant value storage characteristics due to its scarcity, and even considered an alternative safe-haven choice. For example, during the economic crisis in Venezuela, Bitcoin became one of the safe-haven assets for local citizens. However, in the recent global financial asset crash, Bitcoin did not exhibit an upward trend similar to gold but instead experienced a significant decline.

So, can Bitcoin, known as "digital gold," truly serve as a safe-haven asset when needed?

Some senior analysts believe that viewing Bitcoin as a safe-haven asset is inappropriate. They point out that people's expectations for the Bitcoin market are overly optimistic. In reality, the market size of Bitcoin is relatively small, making it difficult to withstand sudden large-scale inflows of funds from traditional financial markets. Furthermore, Bitcoin's price is highly volatile; in the first half of 2019, its price tripled, while in the second half, it fell by nearly 50%. This unstable strong volatility means that currently, almost no professional investment team considers Bitcoin as a safe-haven tool.

From a hedging perspective, Bitcoin is currently far inferior to gold. Due to the relatively insufficient market depth of Bitcoin compared to the massive capital scale of traditional finance, coupled with the fact that mainstream investors have yet to form a proper understanding and consensus about Bitcoin, it is currently more viewed as a highly volatile risk asset that is closely related to liquidity, rather than a hedging asset.

Nonetheless, Bitcoin's current positioning as a risk asset does not mean it can never become a safe-haven asset. Compared to traditional financial markets, Bitcoin is still a relatively niche asset. Although it is premature to call it a safe-haven asset now, Bitcoin has undoubtedly come the farthest on the path to becoming the "digital gold" safe-haven asset, and it holds the most potential.

It is important to emphasize that investors should maintain a rational attitude and recognize the high volatility of the cryptocurrency market, making investment decisions with caution.