Is it a good time to buy Bitcoin in August 2020?

Bitcoin and other crypto-assets have taken a huge tumble in March 2020.

For the first time, we saw a correlation between the stock market and crypto assets, dealing a blow to the narrative of crypto being an uncorrelated asset and its usefulness as a hedge against the stock market.

Visit here to exchange Bitcoin to PayPal

Oil prices are tanking too and coronavirus is spreading like wildfire throughout the world.

However, we need to keep in mind that the big issue here is the global Coronavirus pandemic, and thus we are living in very exceptional circumstances. Investors are not, in my opinion, behaving in a rational manner.

There is panic in the market, and hence it’s an exciting time for the shrewd investor who is able to think with his head rather than his emotions.

In my opinion, Bitcoin at around 5,000 Euro, down from 10,000 Euro just a few weeks ago, is an awesome opportunity to stock up on this asset.

As the world recovers from the Coronavirus scare in the following weeks and months, I expect to see Bitcoin rising up again to at least 10,000 Euro and possibly beyond, giving investors who invest now incredible returns that are probably not possible to achieve anywhere else.

Apart from this general thinking that I have, here are a few more pieces of information that help reinforce my opinion.

Data Shows Cryptoasset Sell-off Was Driven by Short-term Holders

On-chain data provided by Coin Metrics shows that recent price movements were likely mostly driven by shorter-term and relatively new holders. Long term holders appear unfazed in spite of the severe market downturn.

While market cap for most crypto assets fell, the market cap for most stable coins increased. This potentially signals that investors are piling into “cash,” or at least crypto-cash equivalents.

BTC has also entered a historically attractive price zone, with a market value to realized value (MVRV) below one. MVRV compares a crypto asset's market cap to its realized cap. A realized cap can be thought of as an estimation of the asset’s aggregate cost basis.

Google Trends

It looks like people are suddenly more interested in buying Bitcoin after the crash. That’s good news, as more people buy then the price is bound to rise.

Is it correlated or not?

The middle of March was an extraordinary time for global markets. We saw both the largest single-day percentage gain in the S&P 500 and the second-largest single-day decline. During the most extreme week, all markets—stocks, bonds, crypto, gold, real estate—were driven by macro factors. But that tight relationship is already showing some signs of reverting to normality.

If you peel back just a little bit, the long-term noncorrelation becomes apparent. For the 12 months ending March 31, 2020, bitcoin is up 55% while the S&P 500 is down 8%. For the trailing three years, the numbers are bitcoin +463% and the S&P 500 +16%.