The lethal outbreak of Coronavirus or Covid 19 in China has undoubtedly caused the global stock markets to plunge and as such, no exchange has not been affected by it. The aftermath of the virus outbreak has been so deadly that people started calling it a ‘’panicdemic’’ rather than a ‘’pandemic’’. Both the traditional stock market as well as the crypto market sank after the outbreak began showing up its deadly side.
China and South Korea are the most affected countries after the virus outbreak and both these countries have been serving as powerful crypto nations of the world, with China holding around 65% of mining power pertaining to Bitcoin. South Korea also serves as one of the important crypto nations of the world. Therefore, with these two robust crypto nations being badgered by Covid 19, Bitcoin is heavily affected by the Coronavirus outbreak.
Does Coronavirus impact Bitcoin halving & future?
Bitcoin halving needs new mining equipment every time; because once a Bitcoin halving takes place, the existing equipment becomes inefficient for mining. Mining farms then replace the old equipment to be on par with the new algorithm challenges. Therefore, most of the miners being located in China, with the Coronavirus outbreak, turns out to be a pandemic, then the quarantine will be extended even more and drastically impact the Chinese economy, including Bitcoin mining farms. The pandemic will also limit the manufacturing of new machinery, thereby limiting the ability of the mining farms’ ability to be on par with the demand. This may also delay the Bitcoin halving a bit further owing to the reduced hash power.
Impact of Coronavirus on Bitcoin
Most people thought that after the virus outbreak, money would go into Bitcoins and other cryptocurrencies as Bitcoin is considered to be the only ‘’safe-haven’’ asset at the time of crisis. But Bitcoin collapsed by 15% after the virus outbreak, thereby defying people’s expectations.
However, it is to be remembered that the value of Bitcoin is driven by demand and not on factors like interest rates and GDP than other fiat currencies depend on. Therefore, the prices of Bitcoin though showing volatility is most of the time, still remain steady when other markets fall.
Coronavirus undoubtedly affected all markets, be it traditional or crypto markets, but apparently, it does not seem like it is the sole reason for the recent drop in Bitcoin price. However, on the other side of the spectrum, because of the deadly impacts of the virus on the whole world, markets begin to wobble, even more, Bitcoin prices may benefit in some cases.
Therefore, if the virus quarantine continues, it will have a negative impact on Bitcoin and other cryptocurrencies. This is mainly because, until now, Bitcoin and other cryptos are not accessible by the public as they cannot easily exchange bitcoin or crypto for essentials like food and clothing. Moreover, at the times of crisis, people flock to the more familiar options, which bitcoin has not captured yet; it has not yet achieved that ‘familiarity status’ that people can count upon. Bitcoin is safe only as long as it can have the mining support. This lack of inaccessibility at this crucial time will have a negative price impact.
However, if sometimes in the future, Bitcoin and other cryptos are adopted for a mass medium of exchange only then some resilience can be expected in Bitcoin’s stability. Once these phases pass away, both the traditional markets and the crypto market will rebound to its original state as people will again start buying Bitcoins and other cryptos.