The Capital
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The Capital

Coronavirus: impact on Bitcoin and other cryptocurrencies

By CoinJoy on The Capital

Appearing in December 2019, the new coronavirus became the headliner of the world news in January. Today, the whole world is terrified of the growing number of cases and pays great attention to the situation around COVID-19. The new virus not only claimed thousands of lives but also hit the global economy, including the cryptocurrency market.

Bloomberg noted in their January report, that world stocks have lost $1.5 trillion as a result of news about the coronavirus. This preliminary assessment includes, among other things, the consequences of the collapse of prices on the Hong Kong stock exchange.

Japan’s Nikkei index fell more than 2%. European STOXX 600 index lost 1.41%. The French CAC declined by 1.68%, and the German DAX — by 1.47%.

The US markets also felt the blow. At the beginning of the crisis American market had a noticeable hit: Dow Jones lost 1.57%, S&P 500 also fell by 1.57%, and NASDAQ fell by 1.89%

The crisis additionally affected cryptocurrencies. Bitcoin started to crash in February, and on March 12–13, there has been an actual crash. For a quick period, Bitcoin fell under $4,000, accordingly dropping over 1/2 of its price. This situation also affected other coins. For example, if on March 6, Ethereum cost $244, then 6 days later its price fell to $106.

The main viable reason for the crypto’s collapse is the developing reputation of cryptocurrencies amongst conventional investors. After 2016, primary players like the JP Morgan employer became increasingly more curious about the brand new marketplace, investing in cryptocurrencies and associated projects. When such big brands and companies accept crypto as a valuable asset, this links cryptocurrencies with other traditional currencies like USD or gold.

In such volatile conditions, the longer term of the crypto market stays unclear. Optimists consider that the imminent halving in May (lowering the price for adding one block of Bitcoin) and additionally the necessity of people to invest in something more reliable than conventional assets, will cause a repeat of the explosive increase of 2016.

Pessimists believe that the potentialities of cryptocurrencies inside the worldwide crisis are very doubtful, and even halving now won’t cause another rise in price. Although, only time will show what actually happens next.

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