From Tom Hanks and Rita Wilson to Idris Elba and Kristofer Hivju, the spread of Coronavirus has the entire world on the edge of their seats.
On 11th March 2020, the World Health Organization declared the novel Coronavirus outbreak, a pandemic with a footprint on every continent except Antarctica. And on 12th March 2020, the largest cryptocurrency, i.e., Bitcoin market value plunged 26% to $5,863. Bitcoin saw it’s price dropping to the lowest point since May 2019.
The catalyst for this steep Bitcoin fall is the same as all other industry asset classes, i.e., the extreme uncertainty surrounding the spread of Coronavirus. It has led to a global fight for cash. This latest Bitcoin fall happened a day after the U.S. President Donald Trump ordered a 30-day ban on all visitors traveling from Europe. This further propagated the U.S. Federal Reserve, working with U.K., Japan, Canada, Switzerland, and the Eurozone to shore upon financial markets with a massive stimulus.
Moreover, according to this market plunge, the crypto-asset markets seem to be currently mirroring the patterns of traditional markets. The current value of BTC is at an all-time low of $5445.19. (at the time this blog was written) This has also impacted the fall with Ether (ETH), XRP, and Litecoin (LTS), where each tumbled in sync with Bitcoin.
The BitMEX Report
BitMEX, which is the world’s second-largest crypto exchange by the volumes of daily trading, predicts that the ongoing global coronavirus financial crash will be a test for Bitcoin. 2020 presents the most significant challenge as well as an opportunity for Bitcoin in this global financial crisis.
According to the BitMEX Report published on 17th March 2020, there will be a significant impact on the economy and financial markets due to Coronavirus. The report titled ‘Inflation is Coming,’ points at the coronavirus financial market crash as being the most significant economic turmoil since the 2008 financial crisis.
BitMEX has compared it to the Dotcom bubble (2000), Asian crisis (1997), Black Wednesday (1992), Japan Asset bubble (1991), Black Monday (1987), Oil crisis (1973) and the Wall Street Crash (1929).
How can Bitcoin help?
The famous Bitcoin bull and billionaire investor, Tim Draper, has predicted that “it will be Bitcoin, not banks and governments, that will save the day” after the novel Coronavirus crisis passes away.
And there lies the catch. Bitcoin can help, but only in the volatile inflationary aftermath of the response to this Coronavirus crisis. Bitcoin can successfully combat the high-inflation monetary regimes, coupled with reliable internet penetration and active global nodes.
Additionally, Bitcoin’s resilient nature, immunity from shutdowns, and confiscations make it the epitome of monetary justice.
What Lies Ahead
There is a constant regime change traced in the economy as financial markets are set loose without an anchor. Lack of inflation targeting in the current scenario could become the biggest opportunity that Bitcoin will see for growth. The Coronavirus pandemic crisis will test deep waters across all industries and assets, including cryptocurrencies. Whether it’ll stand the test of time or not is yet to be seen as the year progresses ahead. However, the technology behind cryptocurrencies i.e., Blockchain technology, does hold promise to curbing the spread of Coronavirus.