Bitcoin plunges below $6,000, discrediting theory it would be a safe haven

First, the cryptocurrency is not acting as a store of value during the U.S. stock market's worst sell-off in years. Bitcoin dropped 15.5% Monday to its lowest since mid-November, while the S&P 500 fell 4.1% in its worst day in six years.

As U.S. stock index futures dropped Tuesday, pointing to a third day of sharp losses, bitcoin fell below $6,000 to hit its lowest since Nov. 13, according to CoinDesk.

On a year-to-date basis, bitcoin has lost half its value, while the S&P is down 0.92%.

Neither is bitcoin holding up as "digital gold." Futures for the precious metal fell just 0.06% during Monday's stock market plunge, and are up 2.58% for the year so far.

Bonds, as measured by the iShares 20+ Year Treasury Bond Exchange-Traded Fund (TLT), are falling, down 2.58% for the year so far. That's still far less than bitcoin.

Finally, bitcoin's latest decline shows it is quite correlated to major financial assets, in contrast to digital currency enthusiasts who have touted cryptocurrencies as an investment class disconnected from the performance of global financial markets.

Bitcoin became increasingly touted as an uncorrelated store of value during its 2,000% surge in just 12 months to more than $19,000. It still holds gains of several hundred percent since last February.

But that designation of being an investment asset breaks bitcoin's original promise of being a "peer-to-peer electronic cash system." The cryptocurrency has struggled to fulfill that intent, amid disagreements about network upgrades. The median transaction fee is around $2.60, according to BitInfoCharts, while Blockchain.info shows the average confirmation time is about 10 hours.

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