As the coronavirus continues to spread mass panic around the globe, its impact on the financial markets has become increasingly evident. But is there a correlation between the spread of coronavirus and the price actions of Bitcoin and other cryptocurrencies? It would seem so. Here’s the critical repercussions we have witnessed so far.
The deadly virus has been trending since late in December, but it wasn’t until Wuhan, Central China’s most populous city, was placed under quarantine on January 23 that most people started to fully realize just how dire the situation had become.
Now China has always been a key stakeholder in the Bitcoin ecosystem. It is where the world’s largest Bitcoin exchange (Binance) is located and is currently the world leader in bitcoin mining, controlling over 70% of the Bitcoin network’s collective hash rate. With that in mind, it’s easy to see why the current lockdown in China has impacted Bitcoin.
Bitcoin Use Case Rises as China Begins Quarantine of Banknotes to Curb Spread of Coronavirus
Back in January, the Financial Times published an article on why the coronavirus was good for Bitcoin. It was met with heavy criticism with people pointing out the insensitive nature of the report and the fact that it was simply inconceivable for fiat banknotes to be responsible for the spread of the virus as was insinuated.
Well, there now appears to be some truth to the sentiment as China’s central bank recently began to disinfect and quarantine its banknotes in an effort to quell the spread of the coronavirus. Banks in China now use ultraviolet light or high temperatures to disinfect yuan bills and then quarantine them for up to two weeks depending on the severity of the outbreak in the region before redistribution.
The crypto Twitter community was quick to respond to the news, pointing out why Bitcoin is sorely needed.
The premise here is that the probability of infection will become considerably lessened if people switch to Bitcoin since physical money is no longer exchanging hands. The idea isn’t actually far fetched as even the Université de la Méditerranée claims that paper money and coins are potential vectors of transmissible disease.
Unsurprisingly, Bitcoin has continued to grow in price amid the spread of the virus and recently re-entered the $10k levels.
Crypto Events in Asia have been Suspended
Given the warnings that large gatherings can be a catalyst for the further spread coronavirus, many crypto events across East Asia have been put on hold for now. These include:
- TOKEN2049, originally scheduled for March 17 to 18 in Hong Kong, has now been moved to October 7 to 8.
- niTROn Summit 2020, an event organized by the Tron Foundation and originally scheduled for February 29 to March 1 in Seoul, South Korea, has been postponed indefinitely.
- Binance Blockchain Week, originally scheduled for February 29 to March 4 in Ho Chi Minh City, Vietnam has also been postponed indefinitely.
Bitcoin Mining Difficulty Declines
Authorities in China have already begun halting crypto mining operations to contain the coronavirus spread. Earlier this month, the Jiang Zhuoer, CEO of BTC.TOP, one of China’s most popular mining pools announced that police forced the shut down of operations so that employees could stay at home.
“Epidemic prevention in some places is already a mess. I have a mine in a remote suburb. The police came to force all the mining authorities and said that they would not resume work.” he lamented in a recent post on the Chinese microblogging platform, Weibo.
This isn’t all bad news though since it means bitcoin mining centralization could be reduced and mining pools in other parts of the world can fill in the gap.
It also means it becomes less difficult to mine Bitcoin as the network adjusts to the sluggish growth, especially with the Halving just a few months away.