Why Did Bitcoin Drop More Than 6% This Weekend?

Weekend moves are fascinating to watch in the cryptocurrency sector, given the 24/7 trading capabilities that digital asset markets offer investors. For the world's largest token, a 6.5% drop from the close of trading on Friday for equity markets to 3:00 p.m. ET on Monday is significant. Indeed, Bitcoin (CRYPTO: BTC) is struggling to maintain key psychological levels, dropping below $80,000 per token for the first time in nearly a year.

Let's dive into the voracity of this move and the key catalysts driving Bitcoin lower today. This is a multifaceted move driven by a number of key factors, so there's plenty to discuss.

What's wrong with Bitcoin right now?

Source: Getty Images.

Assessing where a given asset class sits on the spectrum of speculative/risk-on assets relative to safe-haven stores of value is difficult. However, when it comes to digital assets like Bitcoin that have multiple narratives surrounding their composition and performance over given periods of stress, I think it's becoming clearer to many investors that this is an asset which behaves much more like a meme stock or a highly volatile unprofitable tech company than a store of value such as precious metals or U.S. Treasurys.

And while gold, silver, and U.S. Treasurys have underperformed over the past week, one would think that any asset viewed as a diversification tool would be viewed favorably by investors (at least relative to equities).

That hasn't been the case, with increased volatility tied to growing macro concerns in the Middle East and forced liquidations among investors in the crypto and precious metals sectors, driving severe short-term volatility in both asset classes.

Right now, it appears this market is becoming an increasingly frustrating one for investors to find a place to hide. If that's the case in the coming weeks, and volatility continues to spike either due to a full-scale attack on Iran or continued market debate over what President Trump's new pick for the Federal Reserve means for financial markets, Bitcoin may not be the place some investors once gravitated to for hiding out.

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.