Even if you don’t follow the news regularly, you may be well aware of the most recent epidemic that has put the world on a high alert, Coronavirus. While China was identified as the hub of the epidemic, the lesser-known fact is that Coronavirus also happens to be the hub of cryptocurrency investments, including Bitcoin. With the highest Bitcoin exchanges in the Asia-Pacific region, which is 40% of the world (according to a research report by Chainalysis), investment analysts are concerned about the degree of impact of Coronavirus on Bitcoin. On the other hand, professionals like Wu are concerned about COVID-19’s potential disruption of business and the impact on prices.
The crypto market comprises a significant number of investors but it is statistically impossible to build a direct correlation between the epidemic and the crypto market. This is being said because the data is not always transparent and crypto trading does not depend only on one factor. Based on previous trends, a report says that the virus outbreak might potentially push up crypto trading numbers for retail investors as they would be home most of the time, checking out market trends. Digital currencies like bitcoin have a unique set of return drivers, making it quite unpredictable. Unlike most other assets, like gold or cash, Bitcoin isn’t actually seen as a safe asset to hold risk upon. It’s almost impossible to predict close price reactions to bitcoin.
Since bitcoin is a highly speculative digital asset, the global crypto market would be affected by COVID-19, says the financial advisor to Chicago-based Asset Management Group. There might be mixed reactions to the coronavirus outbreak. The impact could be limited or on a significant level. There have been times when Bitcoin went up as an asset of value when there was the possibility of a war between Iran and the U.S. However, Coronavirus is not being a geopolitical influence; there are barely any chances of a major impact on Bitcoin.
The World Health Organization (WHO) has declared the epidemic as an international emergency. In the words of Wilfred Daye, senior advisor at Boutique Investment bank Bardi Co. SARS, most of the earlier regional epidemics have had very minor impacts on the equity trade market. However, COVID-19 is no regional epidemic today and is expected to spread its roots on a global scale if we don’t act on it urgently. According to the financial market report of OkCoin, cryptocurrency has always reacted sharply whenever epidemics have become the driving factor of the trade market.
There are even fears of COVID-19 impacting the Chinese economic growth. A wave of economic uncertainty and unrest has crept onto the markets, causing the Bitcoin market to show fluctuating trends.
A report by the Financial Times read, “Coronavirus is good for Bitcoin,” and it brought in room for a lot of criticism. However, the report had no substantial backing data.
Only time will say how the Coronavirus epidemic impacts Bitcoin in actuality.