Why is the Bitcoin price crashing in tandem with the Dow Jones?

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The Dow Jones Industrial Average plummeted by 850 points upon opening, as fears towards the coronavirus outbreak hit its peak.

Bitcoin is not ready to be a safe haven asset, just yet.

For most investors, the asset class with the highest level of risk is single stocks, and Bitcoin fits that category.

Throughout the last 12 months, data from multi-billion dollar investment firms like Grayscale have shown a consistent inflow of capital into the bitcoin market from institutional investors.

Bitcoin is still too volatile and too small in terms of market capitalization compared to other traditional safe-haven assets like gold.

At $177 billion, the total market cap of bitcoin is about 2.21 percent of gold's market cap.

Bitcoin has likely dropped substantially against the USD in the past two weeks because of the shock that has penetrated into the international equities market and the Dow Jones.

In December 2018, when the bitcoin price fell abruptly from around $6,300 to $3,150, several strategists said that the uncertainty around the trade war could have prompted investors to sell high-risk assets including bitcoin amidst a Dow Jones correction.

Considering that the bitcoin price is up by around 50 percent year-to-date, the decent price action could sway investors to sell BTC at the height of geopolitical uncertainty.

The Dow Jones and the rest of the equities market saw a sharp reaction from traders on the day, but the slump could worsen over time as coronavirus shows no signs of slowing down.

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