As Coronavirus continues to spread mass panic across the globe through its thousands of deaths, its impact on Bitcoin is becoming more and more significant. The evidences at hand are so real that we cannot ignore the effects of this pandemic on digital currencies. Behold, Bitcoins’ rally has occurred almost in lockstep with the spread of Coronavirus. In this piece of writing, we’ll be finding out whether there is a correlation between Bitcoins price action and the Coronavirus spread. Also, we’ll also look at how Bitcoin Mining takes a dive following China’s Coronavirus clampdown.
1. As the Coronavirus spreads, Bitcoin continues to break out
As of the time of writing, Bitcoin is providing its worth as a macro hedge against global uncertainty. Year-to-date, BTC has achieved a 35% boost and managed to hit a yearly north of $10,000 last week. Surprisingly, Bitcoin’s year-to-date gains seem to correlate with the Coronavirus outbreak. A good number of people view this as a clear-cut evidence to solidify Bitcoin’s status as a risk-off asset. The notion holds that with China’s economy weakening, Chinese investors have piled in on Bitcoin to make use of its safe-haven narrative.
2. China quarantines infected cash. Can Bitcoin fix this?
With the official death toll mounting to 1,775 and 71,811 confirmed cases of the Coronavirus worldwide, China is reinforcing and stepping up its prevention game. Cleaning cash happens to be one of China’s latest methods to help quell the spread of the Coronavirus. In the same light, China uses ultraviolet light or high temperatures to disinfect banknotes. This preventive strategy has to do with quarantining the banknotes for up to two weeks before redistribution.
3. Bitcoin mining difficulty declines
It is important to note here that one relatively direct consequence of the Coronavirus is its bearing upon Bitcoin mining. Most Chinese authorities have already begun shutting down crypto miners to contain the spread. According to Jiang Zhuoer, founder of Bitcoin mining pool BTC, the police had forced the mining firm into closure. As a result of cheap electricity and availability of resources, China dominates as much as 65% of Bitcoin mining. Hence, the loss of mining firms presents the crypto community with what we can perceive as a double-edged sword. On one side, network health could be negatively affected due to a lack of miners. On the other hand, Bitcoin mining centralization could be reduced, further supporting industry ideals. China’s clampdown is seemingly aligned with a reduction in mining difficulty growth.