On the 31st of December 2019, the day the deadly Coronavirus disease (COVD-19) was first identified in China, Bitcoin price value stood at $7251.95. Today, Thursday 19th of February, 2020, Bitcoin price value currently rests above $10,100.
Bitcoin’s year-to-date gains seem to correlate with the coronavirus outbreak. For many, this is clear-cut evidence to solidify bitcoin’s status as a risk-off asset. The notion goes that with China’s economy weakening, Chinese investors have piled in on bitcoin to make use of its safe-haven narrative. The founder of Quantum Economics, Mati Greenspan however, shared his insight into this notion. According to Greenspan, the sudden constant surge might just be coincidental.
The crypto space has always been driven by world events, but in this case, attributing changes to Coronavirus might be too much of a stretch. “So far, I don’t see any direct correlation between the Corona Virus and crypto Prices,” he explained.
“In my estimation at the moment, we’re in an alt season and that generally tells us that people are looking to take [the] risk if they have an extra bit of Cash. This is exactly what’s happening in the stock market as well. It’s most likely that whatever is driving crypto currency at the moment Is a ‘risk-on’ sentiment and not flight to safety”
Mati Greenspan also added in a bid of sarcasm: “I don’t think anyone inside of China, for example, would be going ‘Ok, people are dying here, let me go buy Bitcoin”
One of the most recent developments in China in culling the Corona Virus disease COVD-19 is in disinfecting their used Yuan notes and sending them into isolation before recycling. China used Ultraviolet light and high temperature to disinfect Yuan bills and quarantine the notes for at least 14 days before redistribution. The crypto community speculates that this provides another positive narrative as to why cryptocurrencies such as bitcoin are sorely needed.
However, Mati Greenspan remarks that Bitcoin prevalence within China is not high enough to justify a replacement. “Bitcoin is not commonly used in China and therefore cannot be a viable replacement for cash. Especially when Wechat and are Alipay are already widely accepted in the country.”
Greenspan explained that other factors explain and play a much greater role in the current condition. According to Nexo’s researchers and analyst, a massive rise in the Bitcoin price could occur due to the upcoming halving Event.
A halving event in Bitcoin is when the amount of Bitcoin generated by the network roughly every ten minutes is cut in half. This event takes place about every four years. Bitcoin’s mining block reward is set to be reduced by half in May, which will result in increased scarcity, and cause a theoretical increase in the market price of the asset.
Added to this is the speculation that the increased instability in the east might have sparked the current crypto rally beginning in January. Greenspan noted that with the U.S missile drone strike in Iraq, for the first time, we saw Bitcoin reacting to a major geological event as a Safe Haven. He said this gave Bitcoin a lot of legitimacy.
Whatever the case, it is an ironic positive that the crypto space is constantly being brought up in the face of crisis, it only serves to underline the progress we have made over the years.