Bitcoin Plummets Below $5K as the Fed Cuts Interest Rates Near Zero
On March 16, 2020, Bitcoin dropped below $5,000 according to CoinDesk.
As of March 17, 2020, it is now over $5,000.
Most of the price volatility that Bitcoin has recently experienced in this due to the uncertainty emerging from the Wuhan virus outbreak.
Especially, the U.S. Federal Reserve’s decision to cut interest rates to near zero, which is the lowest point since 2015. It also carried out a $700 billion asset purchase of U.S. Treasury bills.
After this announcement, other central banks around the world, which included banks in Japan, Australia, and New Zealand, also put forward their own stimulus packages.
According to CoinDesk, “Bitcoin’s movements have mirrored those of the traditional markets during this crisis, countering the popular safe-haven narrative. After spiking by as much as 14 percent immediately following the Fed’s announcement, it quickly corrected and continued on a strong downwards trajectory.”
Several leading members of the cryptocurrency shared their perspectives on the price drop.
Bobby Ong, Chief Operating Officer of CoinGecko, told CoinDesk: “In my opinion, the price drop below $5,000 today is due to [crypto derivatives exchange] Bitmex’s liquidations. Some traders believe Bitmex has a huge backlog of liquidations to be done from last week’s crazy free fall, which saw price fall 50 percent.”
The sharp decline in bitcoin prices last Thursday catalyzed the most long-short liquidations on BitMEX in 16 months.