How Have Bitcoin and Other Cryptocurrencies Been Affected by the Coronavirus?

| March 13, 2020 9:19 am PDT

The supporters of Bitcoin and other cryptocurrencies have always insisted that one of their main advantages is that they are a safe haven in times of crisis. Unfortunately, the coronavirus provided an opportunity to test this statement.

The disease is rapidly spreading across the globe, and it instantly hit stocks, commodities, and every other tradable asset you could imagine. We’re in the middle of the biggest recession in more than a decade.

In theory, this creates the perfect environment for Bitcoin and the other currencies to shine. In practice, it’s exactly the opposite.

In this post, I take a look at how the coronavirus crisis proves Bitcoin is not a safe haven and provide my predictions on the short- and long-term effects of the coronavirus on BTC and the other popular cryptocurrencies like Ethereum and Ripple.

Bitcoin and Other Assets’ Price Movement Since the Start of 2020

Before I move on to the analysis and predictions for the future of BTC and the impact of the coronavirus, let’s look at some facts. Bitcoin started the year around the $8,000 mark and quickly started rising the following weeks and months.

In the middle of February, the price was over $10,000, and the same trend happened with other popular currencies. Ethereum was over $280 for a brief moment in time, Ripple was over $0.30…you get the picture.

The prices pretty much stayed around the same mark for a while, and then a slight drop happened at the end of February. Bitcoin went back to under $10,000, and the rest of the cryptocurrencies followed.

At this point, this looked more like a healthy correction for the spike since the start of 2020. Some people probably hit their targets for buy positions and closed them after $10,000, the selling volume became lower, the usual stuff.

There was a drop to $9,000 followed by a similar movement in the other digital assets, and this is where we started March. At this point, the coronavirus started spreading outside of China and reached Europe. The disease quickly became a worldwide phenomenon and started causing all sorts of damage.

Flights were held, people were quarantined, sporting and cultural events were postponed, and the world slowly started fighting the virus.

Many of the measures were expensive, and the economies of many countries were hit heavily. As a result, we saw the price of the stock market crash. Dow Jones reached its lowest level for more than a decade, and it was the worst day on Wall Street since 1987. All traditional assets have been in a freefall since the start of the month.

The only exception is gold, which initially jumped but has since returned to pretty much the same levels as the beginning of March.

In theory, that was the ideal situation for Bitcoin and the other cryptocurrencies to shine and skyrocket. Instead, BTC entered a freefall, and the price of the currency touched $4,000 yesterday. While there was a correction and Bitcoin is now over $5,000 once again at the time I’m writing this, it was a stunning hit to the credentials of cryptocurrencies as a whole.

The likes of Ethereum, Ripple, Bitcoin Cash, and Litecoin all followed a similar pattern and are nowadays worth half compared to their peak in February.

This begs the questions of why and what happens next.

The Coronavirus Proves That Bitcoin Is Not a Safe Haven

I’ve been interested in the crypto world for almost a decade now, and while I wouldn’t call myself an early adopter, I have been following the sector for longer than most people. I always believed in the core fundamentals of the concept, and I still do to this day.

And yet, I’ve always struggled to understand the logic of the people who insisted that Bitcoin was a safe haven for two reasons.

The first one is that we never saw any proof of that, and the arrival of coronavirus actually is the first huge global crisis in the history of Bitcoin. The cryptocurrency is failing spectacularly at the moment, and this leads me to the second reason why I never liked the “safe haven” label.

The overall nature of Bitcoin simply does not bode well in times of crisis. The path of the cryptocurrency so far has been filled with volatility, liquidity issues, hacks, price manipulations, and other factors that make it a risky investment.

The truth is that BTC is still a high risk, high reward type of asset. It is often driven by the hype and the perception of the mass users. Sure, there are whales and financial institutions playing with the price, fundamentals that keep it valuable to an extent, and other factors.

But the reality is that Bitcoin is too volatile to provide security when the world is burning. There is simply no reason to believe that, and we’ve seen the results clearly. As soon as there was a slight drop, the panic simply sunk the ship.

On top of that, I think that many investors may be closing their Bitcoin positions to gain liquidity. They need it to cover their margins on other assets or simply to prepare for other investments. Cash is king right now as it allows you to carefully look for new opportunities.

The Short- and Long-Term Impact of the Coronavirus on Bitcoin

Bitcoin’s price currently stands at $5,400 or so after correcting yesterday’s insane drops. The big question is what happens next. In the short term, I see no way for the cryptocurrency markets to recover to the levels before the coronavirus struck.

I mean, we could see $6,000-$6,500 in the next couple of weeks, but that’s it. I don’t see where a push could come from, so Bitcoin will either keep falling down or stay at pretty much the same level.

That’s why I recommend you to take advantage of an interesting betting market offered by BetOnline. The bookmaker offers the following wager.

Price of Bitcoin by March 15th, 2020

Under $6000-165
Over $6000+125

I believe that Bitcoin either won’t be able to recover to $6,000, or at least it won’t stay above that mark until Sunday. That’s why backing the under is a good option here.

As for the long-term future of Bitcoin and cryptocurrencies, I wouldn’t dare to make any definitive predictions. The coronavirus crisis has just started, and we have no idea when it will end. Until there is light at the end of the tunnel, it’s hard to say what will happen.

My gut feeling is that the crypto will keep dropping slowly, but it will eventually recover a big chunk of the losses once the disease is no longer part of our daily lives.

Final Words

If you are looking for a piece of investment advice from me, I would say it’s probably best to stand still and observe the Bitcoin price and the other digital assets. This is a unique situation the crypto world hasn’t seen so far, and it’s hard to predict what’s going to happen.

Keep a cool head and don’t make any big moves before you have good reason to believe that there will be some consistency in the near future.

Jerry Summer

Jerry Summer has a wide-ranging interest in gambling and the gambling industry. He's made a living out of both playing poker and betting on sports.

The English Premier League and the NBA are among Jerry's primary areas of expertise. He's knowledgeable about many other sports, too, along with poker and several casino games.

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