This, Without External Help From The Fed

Having suffered losses due to the COVID-19 led market onslaught, both Bitcoin and the United States stock market have had a good month. However, one analyst has pointed out how Bitcoin’s recovery has been entirely driven by market forces, while stocks have been rallying on the back of government intervention.

Bitcoin Recovered Without External Intervention

“Take a step back [to] think about how $BTC has almost completely recovered from the 50% drop in March. No limit down or trading halted, no emergency meetings of producers to cut/alter supply and no government pledges to start buying,” crypto analyst and trader Luke Martin wrote in a tweet.

As of market close on April 21, the S&P 500, the index commonly used to gauge the strength of the U.S. stock market, is up by over 22% since reaching its lowest point of 2020 on March 23. As of the time of writing, Bitcoin is up by over 5% since March 23. Over the same period, the oil market has also crashed as May futures of WTI traded in the negative for the first time in history.

Market Performance of BTC, S&P 500, and Crude Oil. Source: TradingView

The stock rally began in the last week of March after the U.S. Federal Reserve revealed plans to print trillions of dollars of new money. In the same week, Congress ratified a $2 trillion stimulus package to support the American economy, the New York Times reported.

Acts such as this are how governments globally have historically brought the economy out of the woods. And it’s significant that Bitcoin was originally released on the back of the previous economic crisis/government bailout in 2008.

Similarly, for the oil market to stage a recovery from its ongoing glut-driven crash, producing countries will need to agree on supply cuts — the oil market’s form of stimulus.

Bitcoin has, however, proven that natural market forces are sufficient to determine value. This has seen the largest cryptocurrency by market cap become the best performing asset of the past decade, despite the high volatility of the asset. BTC, by design, has a finite supply, it gets harder to mine new units with time. It received zero external interventions as there are no regulators to oversee the market and no emergency “circuit breakers” to halt trading when the price goes down severely. It received no financial injections from the Fed or any other institution and it was driven entirely by its own market dynamics.

Still, Can BTC Be Manipulated?

Despite Martin’s sentiments, however, Sam Bankman-Fried, the CEO derivatives exchange FTX, believed Bitcoin could have gone to zero sometime in March. In a Twitter thread, he claimed that BitMEX had no hardware issues on March 13, but simply switched off its system to help BTC rally “without the gigantic sell wall of the BitMEX [liquidation].”

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