The outbreak of the coronavirus has its repercussions on the global economy. The infectious disease is also affecting the overall ecosystem of the cryptocurrency and its impact on the prices of the digital coins is quite apparent now. Although it is difficult to say with certainty whether that coronavirus is positively or negatively affecting the prices of digital coins, it is a general opinion among the crypto experts, enthusiasts, and analysts that this infectious disease is likely to have a positive impact on the adoption of cryptocurrencies among the masses.
Exploring Positive Impact
One of the effective remedies adopted by China for stopping the spread of coronavirus, which is now being followed across the globe, is the Quarantine procedures. In fact, Chinese authorities have gone one step further and are using UV light and high-temperature mechanisms on currency notes to stop the spread of the virus. People, too, are relying more on the internet while staying away from the currency notes. This trend is likely to boost the adoption of digital coins among the larger section of the population, which, in turn, will help the prices of the Bitcoin and other digital currencies to go up and yield profitable returns for the investors.
Stablecoins: Real beneficiary
More specifically, we have witnessed an increased interest in the stablecoins after the outbreak of the coronavirus. This may be attributed to the fact that stablecoins have less price volatility than digital coins and people are more confident about their future value than Bitcoin and other digital currencies. People across the globe are patronizing stablecoins amid virus outbreak and using them for their buying or selling activities in addition to accomplishing a number of other different tasks.
Impact on Cryptocurrency Mining
One area where the impact of the coronavirus could prove to be harmful to the digital currencies is their mining operations. This is because China has around 70% share in the Bitcoin mining thanks to the availability of the cheap electricity and robust technological prowess. And now, with authorities ordering a clampdown in order to contain the spread of the virus, the mining operations have been hit adversely. Now it is quite probable that because of the constraint supply, prices of Bitcoin and other cryptocurrencies might increase, but then the extreme shortage of the digital currencies could also have the potential to backfire. The tendency of hoarding might creep in the system, which will send a wrong signal to investors and potential adopters in the long run.
Despite speculations around the coronavirus and its possible impact on Bitcoin and other digital currencies, experts are quite unanimous in their view that this tragedy might help the case of digital coins. Cryptocurrencies will emerge stronger and their claim to be a credible alternative to the conventional monetary system helmed by central Banks and financial institutions will be strengthened. The full impact of this virus and its impacts on socio-economic parameters will only be ascertained once experts get accurate figures, but the adoption of digital currencies will likely gain momentum due to this highly contagious virus.