The first months in 2020, the world is upside-down. A disease which is named COVID-19, caused by Coronavirus, originated in Wuhan City, China. COVID-19 is very dangerous because it can spread from person to person, the incubation period up to 14 days without symptoms and possibility of spread multip […]
The first months in 2020, the world is upside-down. A disease which is named COVID-19, caused by Coronavirus, originated in Wuhan City, China. COVID-19 is very dangerous because it can spread from person to person, the incubation period up to 14 days without symptoms and possibility of spread multiple times. At this time, there are over 160.000 cases confirmed, 6500 deaths over global and detected in 147 countries/regions.
COVID-19 not only affects human health but also affects others such as education, economy, absolutism. Cryptocurrency isn’t an exception, especially bitcoin.
1. As The Coronavirus Spreads, Bitcoin Continues To BreakOut
Bitcoin is proving its worth as a macro hedge against global uncertainty. Year-to-date, BTC has achieved a 35% boost and managed to hit $10.000 in the mid-February.
For many, this is clear-cut proof to prove that bitcoin is a risk-off asset. The notion goes that with China’s economy weakening, Chinese investors have poured money into bitcoin to keep their assets safe.
On February 3, CSI 300, one of China’s foremost stock indices, had its worst open in over a decade when plunged 9%. Additionally, the Shanghai Composite Index nosedived 8%. Chinese stocks quickly bounced back thanks to an attempt at the economic stimulus of the Chinese government through cutting interest rates. Meanwhile, Bitcoin continues to hold near $10.000.
Early March, BTC and others in the top 100 went to red. On March 11, WHO pronounced COVID-19 is a global pandemic. Cryptocurrency went to panic like traditional stock, Bitcoin’s value has changed dramatically. March 12 is considered Bitcoin’s darkest day, Bitcoin’s value dropped 35.52% from $7.962 to $4.895. Next day, March 13, Bitcoin suddenly dropped down under $4.000, reached the lowest value of the year at $3.782 and then bounced back to $5.260 in a matter of hours.
COVID-19 is driving Bitcoin crazy.
- China Quarantines Infected Cash. Can Bitcoin Fix This?
Mainland China is still the biggest outbreak of the world with over 81.000 cases confirmed and over 3200 deaths. The Chinese government is struggling to fight against COVID-19 in many ways.
One of the latest methods to stop the spread of Covid-19 involves cleansing cash. According to a central bank press conference, China has begun using ultraviolet light or high temperatures to disinfect banknotes. This includes quarantining the banknotes for up to two weeks before redistribution.
Before the New Year celebration, China’s central bank made an “emergency issuance” of four billion yuan notes designated for the virus epicentre Hubei.
For the crypto community, this problem can be solved easily and thoroughly: The physical money no longer exchanges hands, the possibility of spread can be reduced to the lowest.
However, Bitcoin seems isn’t high enough to justify a replacement. First, Bitcoin isn’t commonly used in China so can’t be a viable replacement for cash. Besides, Wechat and AliPay are already widely accepted in the country.
According to a research paper from the Université de la Méditerranée, laboratory simulations reveal that the “superbug” MRSA can survive on coins. Meanwhile, the flu, Norovirus, Rhinovirus, hepatitis A and Rotavirus can be transmitted through hand contact.
Perhaps a switch to bitcoin isn’t such a bad idea.
- Bitcoin Mining Difficulty Declines
Ability to exploit Bitcoin in China is declining because of the effect of coronavirus.
Chinese authorities have begun shutting down crypto miners to contain the spread. Earlier this month, Jiang Zhuoer, founder of bitcoin mining pool BTC, announced on Weibo that police had forced him to close his mining firm.
Thanks to a mixture of cheap electricity and resources, China dominates as much as 65% of bitcoin mining. The loss of mining firms presents the crypto community with a double-edged sword. On one side, bitcoin mining centralization could be reduced, further supporting industry ideals. On the other, network health could be negatively affected due to a lack of miners.
China’s clampdown is seemingly aligned with a reduction in mining difficulty growth. On February 11th, the Bitcoin network adjusted a mere 0.52% per data from BTC.com. This comes in stark contrast to January’s adjustments, which saw network difficulty grow 11.75% in total.
Bitcoin may become easier to mine as a result of this sluggish growth, which would allow retail miners—who are otherwise priced out—a slice of the action.