Where will Bitcoin go if global stock and oil markets fall further?

Stock and oil markets extended losses to fresh lows on Wednesday as investors rushed to cash amid the coronavirus epidemic.

Bitcoin has shown an incredible correlation with the stock market over the past few weeks, but it has ignored the stock and oil market crashes today to stay above $5,100. Will Bitcoin manage to resist the pressure next?

S&P 500 falls to 3-year low, oil prices fall to 18-year low

Recently, the media reported that Bitcoin's performance often follows the Dow Jones and S&P 500, the most representative of the U.S. stock market. However, since last Friday, the largest cryptocurrency Bitcoin has begun to consolidate, showing unusual stability while traditional assets are facing significant losses.

As of 6:35 pm UTC, the S&P 500 fell nearly 8%, hitting its lowest level since February 2017. Elsewhere in the market, the Dow Jones Industrial Average fell nearly 10%, hitting its lowest level since November 2016. Both indexes are down about 30% from their February highs.

The oil market has also hit a low again, this time reaching its lowest level in 18 years. At the time of writing, Brent crude futures are down more than 11%, while WTI futures are down more than 22%. The two crude oil brands are currently trading at $25.40 and $21.28, respectively.

Oil prices began to fall after Saudi Arabia effectively declared an oil price war against Russia, disintegrating the OPEC alliance. The world's largest oil producer lowered its official oil selling price and increased production during a period of falling oil demand.

Investors are even dumping assets that usually act as safe havens, including gold, silver and government bonds, suggesting everyone is seeking cash. Ironically, even cash is losing value as central banks are working in a coordinated effort to lower interest rates and inject money through quantitative easing.

Peter Boockvar, chief investment officer at Bleakley Advisory Group, believes the selling of government bonds is evidence that the market's attitude has shifted. He told the Wall Street Journal that now they have noticed U.S. Treasury bonds, which tells you that there may be no other safe assets now except cash.

Will Bitcoin become a "safe haven"?

Bitcoin has fallen more than 1.5% in the past 24 hours, according to Coinmarketcap, but this is a negligible fluctuation for the digital currency.

While the cryptocurrency leader Bitcoin can ignore the collapse of the rest of the market today, it may test new lows tomorrow or in the coming days as the panic does not seem to have bottomed out.

The number of coronavirus infections worldwide has just surpassed 200,000, more than doubling in the past two weeks, and regulators are imposing travel bans that are also hurting the industry.

"It's happening so fast, it's almost hard to keep track of at this point," commented Frank Cappelleri, executive director of Instinet. "At this point, if you look at the futures overnight and there are no limits, it's a relief."

Some analysts expect that if Bitcoin falls below the $3,000 level, it could even fall to as low as $1,000.

Tone Vays said that the price floor of Bitcoin is $2,000, and if the price floor of $2,800 appears in the next few weeks or months, there is no need to worry. This may be nonsense, because $3,000 is the current floor, and if we fall below this support, it is not surprising to fall to $1,000.

It remains to be seen whether Bitcoin will act as a safe haven when panic further descends on the market. On BitMEX, futures for March 27 and June 26 are trading above $5,200, suggesting that investors are still confident for now.

However, the only thing that is certain is that no asset is safe at this moment.

However, even if Bitcoin is about to test new lows, it will most likely be the first asset to rebound when the panic passes, which also means that we can now buy "discounted" Bitcoin at some discount prices.