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Sub-Par Performance: A Tough Week For Cryptocurrencies

In an earlier Live Market Update, I talked a little bit about correlations and the inverse relationship between stocks and gold. But, where do cryptocurrencies factor into the equation? Are they a safe-haven asset for investors fleeing risk or just another tool for speculation?

The topic of cryptos becoming financial safe-havens has been hotly debated since inception. An isolated market structure and lack of any physical backing make cryptocurrencies truly unique assets. It stands to reason that they may become a great alternative to currencies, commodities, or stocks due to their independent nature. But is this currently the case? Based on last week’s performance, the answer is a hard no.

Seven Day Metrics For Leading Cryptocurrencies

Of course, a seven-day sample size is far too small to draw any meaningful conclusion regarding the crypto/safe-haven question. Nonetheless, cryptos did not insulate investors from risk during the panic selling of global equities earlier this week. The performance of the big four cryptocurrencies over the past seven sessions pretty much sums it up:

Coin                          Percentage Gain/Loss        Key Number

Bitcoin(BTC)                              -5.3%                              $6000

Bitcoin Cash(BCH)                  -13.9%                              $450

Ethereum(ETH)                      -12.5%                               $200

Litecoin(LTC)                            -8.8%                                 $50


One telling observation facing the leading cryptos is that from the late-Wednesday U.S. session through Thursday’s close, each of them took a nosedive. This move was contrary to that of gold and in tandem with plunging global equities.

For the same period, the Swiss franc and Japanese yen posted gains against the USD while cryptos lost ground. All in all, as uncertainty entered the financial markets, cryptocurrencies took a backseat to traditional safe-haven assets. It is safe to say that the crypto sphere is not yet a bona fide financial shelter.

There is nothing new to report on the Bitcoin ETF news front. The open SEC forum for public comments on a BTC ETF is due to close on October 17. At least for the time being, final approval or denial of the first BTC ETF is expected out sometime in early 2019.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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