27 Jan 2020 Arjun Agarwal
Coronavirus And Cryptocurrencies: What Is The Correlation?
The latest virus outbreak in Central China could harm the crypto environment in China, according to the CEO of crypto lending company DeFiner Jason Wu. The co-founder of DeFiner stated that “nobody wants to attend crypto-related gatherings or any social events whatsoever.”
“We had arranged meetings with potential customers, but now we have to reschedule them.”, Wu explained, further clarifying that he is concerned about the Coronavirus affecting crypto prices, as China is becoming a crypto investment hub in the Asia-Pacific region. In fact, China accounts for 40% of the world’s top-50 exchanges, followed by Europe with 18% and the United States with just 12%.
The virus already claimed more than 80 victims, as well as over ten recorded cases of the disease outside China. The situation, according to Wu, “would result in drastic hold of investments into the crypto sector.” Furthermore, the market might receive an unwanted surprise “if money flow into cryptocurrencies and digital assets stops due to the virus,” Wu stated.
While it’s soon to find a strong correlation between the virus outbreak and the prices of cryptocurrencies, some crypto experts believe the virus could have little to no impact on the crypto sector. Lingxiao Yang, CTO of San Francisco-based crypto hedge fund Trading Terminal, explained that it’s almost impossible to identify and isolate a single reason for crypto price fluctuations.
“Also, the market cap of the crypto sector is significantly smaller than the stock market. Massive price shifts are or can be a result of many factors. Given the timeframe of the outbreak – during the Chinese New Year, retail investors could have more time to invest, as well as more online shopping for customers.” Yang stated.
On the other hand, Bitcoin, as well as the entire crypto market, showed geopolitical fluctuations, when the U.S. army attacked Iranian general Qasem Sulleimani. While the traditional world saw price slumps, Bitcoin received a welcoming push into 2020. However, financial advisor Samuel Lee stated that the crypto market reacting to the Coronavirus outbreak is an unlikely to happen geopolitical scenario. Lee also noted that the level of fear among Chinese citizens is still too low to cause massive immigration.
In the meantime, the World Health Organization (WHO) is still thinking whether or not to classify the Coronavirus as an international public health emergency. During the debates, the market responded, as U.S. index S&P 500 traded in the green, while the Hong Kong Hang Seng Index and Shanghai’s A Shares Index recorded severe dips.
“Historically, massive epidemic outbreaks did minimal damage to the traditional market, while the crypto sector might react severely. Only the Severe Acute Respiratory Syndrome (SARS) managed to shake the financial world.”, the former head of financial markets at OkCoin Wilfred Daye stated.
As of press time, the crypto market trades in the green, recording a total market capitalization of nearly $242 billion. Bitcoin is near its weekly high of $8,792.99, currently trading at $8,726.98. Ethereum is also trying to jump over its 7-day high of $171.01 per ETH token. The second-largest cryptocurrency is presently trading at $170.04. The rest of the pack follows the trend closely, with Bitcoin Cash skyrocketing with a 12% price increase over the past seven days. The other big gainer in the top-10 is Ethereum Classic (ETC), with almost a 20% price increase over the past week.Cryptocurrency Crypto Market crypto crypto bitcoin china cryptocurrencies cryptocoins cryptocurrency news cryptocoin crypto news