2020 began on a high note for the crypto industry with Bitcoin (BTC) surpassing $10,000 multiple times. With the onset of the Coronavirus, markets started getting shaky as investors rushed towards exchanges to liquidate their crypto holdings. Fear, along with the lack of liquidity, threw BTC down from the $9,000 region to under $4200 over the weekend.

The entire weekend saw $5,000 as the critical support and even saw a rally towards $6,000 that failed to materialize into further gains. A bearish pennant pattern was formed on Bitcoin’s daily with the 5k support. However, the support failed to hold and has put BTC under the risks of a breakdown. As of now, BTC is trading slightly below $4600, down 14.99% over the past 24 hours.

Federal Reserve cut interest down to Zero

Before dropping below $5000, BTC rallied up 14.33% to hit a daily high of $5490 before falling back to where it is now. This surge in price was attributed to the announcement of the U.S Federal Reserve, cutting its interest rates to Zero on Sunday, while launching a $700 billion quantitative easing program designed to protect the economy from coronavirus panic.

However, following the announcement, Dow futures dropped more than 1,000 points, triggering the limit down and showcasing hope that the Monday open could see the Dow, S&P 500 and other major indices give back the gains accrued at the market close.

Despite the announcement of the feds, investors seem to be concerned about the long-term impacts of the pandemic on the world’s economy. The impact of multiple nations shutting down borders, airline operators halting operations, and mandatory self-quarantines and curfews can be seen in the sharp pullback in the futures market.

Nowhere is safe

As of now, BTC continues to plummet downward with the next support at $4100. If the support fails to hold, this could be quite troublesome for the world’s number one cryptocurrency. According to some analysts, investors have lost faith in safe-haven assets like Bitcoin and Gold as both have failed to perform. Prominent trader Sven Henrich, the founder of NorthmanTrader.com, said:

“What’s worse about this crash is that people are getting obliterated in what they thought were safe havens such as metals and crypto. There are no safe havens in a liquidation crash.”

Because traditional markets are prone to financial breakdown, BTC was created to act as a hedge against that. Yet, as the coin hit the mainstream media space, it quickly changed its designation from a currency to a store of value, which drew in institutional investment. This soon backfired on Bitcoin as investors started cashing out, and Bitcoin became what it was designed not to be.

Looks like Gold bug Peter Schiff, who’s also a famous bitcoin critic, saw this crash days before this happened. On March 11, Schiff tweeted: