Coronavirus: Impact on Bitcoin’s price
With the ongoing coronavirus outbreak, many people may wonder how this crisis will influence bitcoin price.
After a rather prosperous 2019, the year 2020 welcomed us with the spreading virus pandemic that caused a serious global financial crisis. It turned out that the coronavirus economic impact over the cryptocurrency industry is also significant. Bitcoin price has been changing drastically since the beginning of the outbreak, and it is hard to predict the long-term consequences of this situation. It leads us to the question: what determines the price of bitcoin in the time of the coronavirus outbreak?
Bitcoin price in the time of disease
Let's start with a brief analysis of the Bitcoin price chart over the last month. The beginning of the year was bullish for the leading cryptocurrency. It was continually growing until February, reaching the price above $10,000 - the highest value since last summer. What determined the price of Bitcoin at this point?
Many have indicated that the major growth was, in fact, caused by people who saw cryptocurrencies as secure assets during the time of the global financial crisis, similar to gold. But the coronavirus economic impact wasn't the only threat that might have made people eager to find some form of preservation for their funds. Before the outbreak gained momentum, people were afraid of the potential consequences of a tense political situation between the United States and Iran, which could encourage them to secure their assets in Bitcoin.
Cryptocurrency enthusiasm of cautious citizens sparked the bull market, encouraging traders to invest in decentralized assets. However, the price of bitcoin couldn't grow forever in such conditions, and the prosperous situation had to come to an end. Since the end of January, the value of the most popular decentralized currency has started to fall once again and hit the level of $5,000 in the middle of March.
Coronavirus economic impact over the mining industry
Before we move to the potential consequences of this situation (and point out how to use the bear market to our advantage), let's take a look at coronavirus economic impact in addition to bitcoin price. The current value of the cryptocurrency market is a result of many various factors. One of them is the mining industry - and it appears that COVID-19 has influenced it to a large degree.
Like every epidemic, coronavirus has forced authorities to quarantine people infected with this disease. This process is especially intense in China, the epicenter of the disease. The quarantine forced restrictions in many industries - and the cryptocurrency world is no exception here. The country is a significant hub for Bitcoin mining operations, maintaining about 65% of global hash power, according to CoinSearch Research.
Coronavirus economic impact in the mining industry is severe. Due to the outbreak, many Chinese miner manufacturers had to delay shipments, significantly influencing overall blockchain network performance. As for now, they have resumed some part of their deliveries, making the Bitcoin global hash rate to rise again. Yet it showed that coronavirus economic impact doesn't end with bitcoin price changes.
Good time for traders?
Even if we can't be 100% sure what determines the price of bitcoin during the epidemic, we may try to use the situation to our benefit. Due to the global financial crisis, the situation in the cryptocurrency market is unstable, and we can expect great fluctuations in bitcoin price. The bearish trend may quickly change into the bull run - and vice versa. It is the perfect time for cunning traders.
As for now, we are in the bear market situation. According to the well-checked rule in the cryptocurrency market, we should buy Bitcoin when the price is low, so the current bitcoin price is perfect for investing. However, due to the unsure global economic situation, most of the previously acclaimed guidelines and tips for traders may not be suitable today.
Does that mean there are reasons to be afraid? Absolutely not. We should not panic, neither due to the cryptocurrency market situation or the ongoing outbreak of COVID 19. As for the first, the coronavirus economic impact is still not sure, but it definitely won't cause the collapse of Bitcoin's blockchain. As for the epidemic itself, the only thing we can do is to be cautious and check live updates on the coronavirus outbreak.