Changes In The Crypto World In Light Of The Coronavirus Epidemic

Changes In The Crypto World In Light Of The Coronavirus Epidemic
Photo by Jievani Weerasinghe on Unsplash

The deadly Coronavirus (COVID-19) has taken the world by storm as 139,767 confirmed cases appear. Until now, the epidemic has claimed 5,122 lives, but fortunately, 70,733 people have recovered from the disease. The World Health Organization (WHO) has declared it a global health disaster that is having serious implications on the economy of the infected countries. People are resorting to safe-haven investments like gold and treasury bonds.

With 135 countries reporting infections amid flight cancellations, business interruptions, and shipment delays, the disease has sowed a seed of fear amongst investors, business conglomerates, and other stakeholders. Cryptocurrency investments have become mainstream thanks to initiatives taken by big companies like Facebook and Square, allowing mainstream B2B users to enjoy the versatility of this technology, and gain more information regarding various coins through crypto.

Now, the pressing question is, how are the crypto markets reacting to this epidemic? Let's find out:

Sudden Surge in Bitcoin Prices

Bitcoin crashed during the start of this month by 15% and dragged down the entire crypto market with it, leading the analysts to reassess their hypothesis that the cryptocurrency serves as a haven from financial panic. The digital asset was born almost a decade ago as a result of the last global financial crisis. It had an incredible start to the year and kept hovering above $10,000 before moving into a free fall due to the rapid spread of coronavirus.

The price went as low as $8,627, but some optimism returned to the market as a 24% increase was seen, as of February 28. As the virus became a constant part of the news cycle, cryptocurrency trading volume increased steadily. Given the current crisis, Bitcoin is carrying the same importance as gold. The precious metal is known to rise during such situations in the stock market. The rally for Bitcoin is very much similar to that of gold except for the unpredictable modern challenges.

It is assumed that as more individuals get identified across different countries, the traditional financial markets will be adversely affected, resulting in a jump in Bitcoin prices. However, as the trust deficit deteriorates, one cannot expect cryptocurrency rates to explode.

Hurdles Faced by the Mining Companies

Apart from Bitcoin and gold, the situation has been grave even for the crypto world following the coronavirus epidemic. Though, China has been hostile towards cryptocurrencies as the People's Bank of China banned crypto trading. On the other hand, it serves as a fertile ground for crypto mining, and the mining industry estimates for billions of dollars in China alone. The local Bitcoin mining in China is so big that it has been limited to the Inner Mongolia province.

With other industries shutting down, mining production is also facing the consequences, as the fresh supply of blocks is going to decrease. It threatens to end the entire supply chain of the mining hardware companies, affecting businesses like Canaan, Bitmain, and MicroIBT. InnoSilicon is facing the worst consequences with its headquarter located at ground zero of the outbreak, Wuhan. Companies have reported that they had to halt the pre-sale process as the shipments suffered gravely.

Since manufacturers are unable to provide the demanded services, the highest risk relates to post-sales and maintenance. While the case isn't too disruptive yet, it can become exceedingly dangerous as the virus keeps spreading.

Asian Crypto Conferences Being Delayed

A major negative consequence has landed on cryptocurrency conferences, summits, and meetings. Most of these were to take place in China or other neighbouring countries. Unfortunately, all the events have been cancelled due to the regional coronavirus outbreak. A prominent conference, Hong Kong Blockchain Week 2020, has announced that they have put the event, which was due in March, on hold. A future date for the conference is yet to be decided, given that there's no certainty about the epidemic coming to an end.

Hong Kong does not host just one event as the TOKEN2049 conference is the biggest cryptocurrency conference that was supposed to be held in mid-March 2020. Instead, it has been rescheduled to take place on 7th and 8th October.

The globally popular crypto exchange company, Binance, postponed its Binance Blockchain Week Vietnam that was scheduled from February 29th to March 4th. They also announced that they are going to reimburse the registered guests. Apart from the cancellation or delay of such important events, many companies have also ceased their operations. Cointelegraph reported that a local Hong Kong startup called Bitspark abruptly closed due to internal structuring issues amidst the coronavirus chaos.

Crypto Community Fighting the Deadly Pandemic Together

As coronavirus impacts the crypto world and blockchain, several companies and individuals have stepped out to announce projects to combat the situation.

  • Acoer, a blockchain-enabled applications developer, launched a data visualization tool that could track the deadly coronavirus.
  • To support medical donations to Chinese hospitals, Hyperchain has built a platform, which ensures that the process remains reliable and traceable.
  • Binance has announced a donation of $1.5 million to help the victims of coronavirus in Wuhan.
  • TRON and some independent startups and investors have made appeals and donated significant sums of money to help those who have been infected.

The Bottom Line

As for now, the entire world is shaken by this epidemic as it no longer resides within the geographical boundaries of Wuhan. With the state getting grave in countries like Iran and Italy, the U.S., the U.K., and other European nations have taken strict measures to protect their citizens. While few economies plan to return to stable positions, one can't be sure of the next market movements as they highly depend on the success or failure to develop a vaccine and the actions taken by governments to curb the pandemic.

The soaring high price of Bitcoin is in no way organic, so investing a huge sum of money is not advisable. With limited economic activity on the ground, the need for crypto payments will come down significantly, giving a huge setback to the industry.