- As the global market continues to react negatively to the continuous spread of the Coronavirus, Bitcoins seems to have joined the bandwagon after breaking below the $8k psychological level
- Safe-haven and risk asset narratives of Bitcoin (BTC) stink as the digital asset defies expectations
- Major blockchain and cryptocurrency events including the Bitcoin 2020 event has been postponed in response to this global pandemic
Bitcoin has long been perceived as a currency that shares identical characteristics with gold. Because of this, Bitcoin has also been referred to as ‘digital gold’. With the perceived notion of digital gold, the crypto community has looked up to Bitcoin to become a safety net in the face of an ailing global market. With the recent market outlook, investors have struggled to find the supposed ‘safe haven’ in Bitcoin and are wondering how might coronavirus affect crypto.
Experts argue that many different factors could have resulted in the current bearish movement in the global market: the biggest fall of oil prices since 1991, and the continuous fall of the stock market which has seen the Dow Jones Industrial Average sinks 2,000 points in its worst day since 2008 for examples.
The recent fall in the crypto market wasn’t a great concern to the crypto community until Bitcoin plummeted below the $8k psychological level. With the recent crypto market outlook, analysts have warned that a further fall in the price of Bitcoin might be imminent. The big question however is, what does the continuous spread of the novel COVID-19 virus mean for the crypto community?
The Case of the Recent Outbreak of the Coronavirus
From what came to be known as an epidemic only associated with the Wuhan province in China has now risen to become a global pandemic. The initial suspected case of the Coronavirus was first documented on December 1, 2019. However, it took over a month for the genetic sequence of the novel β-genus Coronavirus to be fully identified on January 3rd.
The first case of the Coronavirus identified outside China was in South Korea. Since then the virus has continued its march across the planet with about 122,237 recorded cases and over 75 countries affected so far.
The widespread pandemic has seen most factories shutting in China especially in the densely affected regions. China which ranks as the second-biggest economy has seen a slow down in business activities in a bit to curtail the spread of the virus. This has affected the United States as well as other countries that have a strong trade relationship with China.
As many would argue, the panic caused by this novel virus seems to have outweighed its fatality. This global panic has had a great toll on the world financial markets. Even though the crypto market is relatively young, it has failed to escape the evil touch of the demon in this ravaging pandemic.
How The Crypto Market Has Fared In This Hard Times
The hypothesis of Bitcoin as a hedge against the global market uncertainties has been severely tested in the past few days, and somehow this test came out negative. One may even point out a correlation between the two as negative sentiments have spread around the world just as fast as the Coronavirus, causing a rapid fall in the cryptocurrency market.
There has been a shift in the market picture since Bitcoin broke the 200-day moving average and plummeted below the $8k major support area. While many people might perceive this as a buying opportunity, other persons couldn’t hide their disappointment on the supposed ‘digital gold’.
Most influential figures like Mike Novogratz took to their Twitter page to defend the action of the noble digital asset, stating that the recent movement is a normal market reaction that is likely to happen in the face of an ailing global market:
“How did $btc go from being a hedge against bad stuff to getting washed out and trading like a risk asset? When things go from bad, to very very bad like they did last week, investors take leverage down as fast as they can. They book profits to make up for other losses. Ouch.”
From whichever perspective one chooses to view it from, it cannot be argued that the crypto market has taken its fair share of the negative effect of the global spread of the Coronavirus. The pandemic nature of the Coronavirus has halted major events and large gatherings across countries that have recorded one or more cases of the virus.
The most anticipated Bitcoin 2020 event scheduled to take place in San Francisco has been postponed from the 27th of March 2020 to Q3 of 2020. This Bitcoin indigenous event was to feature the likes of Blockstream’s Adam Back, FTX and Alameda CEO Sam Bankman-Fried, and a host of other respected personalities.
This isn’t the first blockchain event to have been shifted since the spread of the Coronavirus intensified. TRON foundation who has been keeping a close watch on the situation informed all prospective attendees of its niTROn event amid the spread of the global pandemic.
In the same progression, Hong Kong Blockchain Week and Token2049 which were meant to take place around the same period have been shifted indefinitely. It’s a very difficult time for the entire crypto community as the short term market outlook has turned extremely bearish.
Will Coronavirus Affect Crypto?
The widespread effect of the Coronavirus is arguably a great distraction to the upcoming Bitcoin halving scheduled to take place somewhere in mid-May. The halving which has historically been perceived to have a bullish effect on the crypto market seems to have been suppressed by the Coronavirus effect, at least for the short term.
Obviously, the short-term effects on cryptocurrency prices have been observed, but will this have a long-term effect? It’s really difficult to tell at this point, especially because this could have both a bullish and bearish effect on crypto depending on the market dynamics of other asset classes.