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Bitcoin price surges. Is Coronavirus behind it?

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The Coronavirus is negatively already affecting several global industries and should the disruption continue, we could see the impact reach all the way to the end of 2020. One of them, electronics and tech are already feeling the impact of the coronavirus. With Bitcoin’s scheduled halving in May, Chinese miner manufacturers have seen a rise in demand for new equipment. The world’s largest manufacturers of mining equipment are based in China (Bitmain, Canaan, MicroBT, and InnoSilicon) and all of them face delays in production and delivery. The price of Bitcoin and cryptocurrencies have increased whenever investors start to panic. Should we consider the coronavirus outbreak a good thing for the cryptocurrency market?

Ilias Louis Hatzis is the Founder at Mercato Blockchain Corporation AG and a weekly columnist at DailyFintech.com.

In a tweet on Valentine’s Day, Balaji Srinivasan, the ex-Coinbase CTO, compared bitcoin’s price to the growth of coronavirus. Srinivasan thinks that bitcoin will reach $100,000 following in the footsteps of coronavirus:

The comparison might look far-fetched, but in followup tweet Srinivasan provides more information to defend his position, including links to Wikipedia pages of Excursion probabilities and Geometric Brownian Motions. The comparison probably doesn’t make a lot sense to those unfamiliar with the stochastic process, but Srinivasan tries to enlighten us about the similarities between the latest Bitcoin price surge and coronavirus outbreak.

China has the status as a crypto investment hub. China is one of the most important markets for the crypto industry, not only in terms of sales and adoption, but also in terms of the number of startups. The country is the birth-place of major crypto companies including Binance, TRON, Huobi and others.

Even though the Chinese government has banned the trading of cryptocurrencies, the country still leads Bitcoin mining, with an estimated 65 percent of the total hash rate. China also houses the most crypto exchanges in the Asia-Pacific region, which has 40 percent of the world’s top 50 exchanges.

As we approach the upcoming halving, crypto funds and exchanges have been on an arms race, ordering new and more powerful models as they expect the halving will increase the price of bitcoin.

While manufacturing delays in mining equipment has been good news for existing miners, some mining operations have been interrupted. At a mining farm located in a remote part of China, BTC.top had to stop operations. Even if some Chinese crypto mining facilities are shut down by authorities, it looks like is has little to no impact on the network’s hash rate. The network appears to be performing stronger than ever with hash rates continuing to rise.

Screen Shot 2020-02-16 at 23.42.26.pngChinese crypto investors are a considerable market force. Since the US-China trade war started in 2019 and now with the coronavirus outbreak and stock markets failing, bitcoin has seen massive investments, by nervous investors.

Usually when stocks go down, cryptocurrency prices go up. Bitcoin has risen 48% since the start of 2020, outperforming gold. This may be due in part to the coronavirus. The market cap for the entire crypto sector has gone from $190 billion to the $290 billion.

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With 69,191 people infected with the coronavirus and 1,668 fatalities in China, many basic medical supplies are scarce. The crypto industry was among the first to support the fight against the epidemic. Hyperchain launched Shanzong, a blockchain-based donation tracking application. The platform tracks donations, from money, masks and other medical materials given, the matching to areas of need and delivery. It was launched last Monday and has already recorded 500 donations. Binance Charity helped Chinese Corps to distribute over 70,000 masks in the infected areas.

Also, as the world is trying to tackle the spread and treatment of the coronavirus, blockchain is being used for insurance claims.  In an article by the South China Morning Post, Xiang Hu Bao, a Chinese online mutual aid platform, added the coronavirus to the illnesses that are eligible for a one-time payout of 100,000 yuan ($14,300).

The cryptocurrency space saw the birth of CoronaCoin (NCOV), published in a Reddit post. Now you can bet on the coronavirus pandemic, The more the virus spreads the more valuable the token becomes. According to the website, the total supply is based on the world’s population and the token will be burnt once every 48 hours, depending on the number of infected people and fatalities.  What a way to incentivize people… let’s spread the disease to gain. It should do the exact opposite and gain value as the disease stops spreading. All the money, not just a portion, should be donated for a vaccine and to buy masks and other medical supplies.

The Chinese doctor that alerted the world about the coronavirus, who died last week, has now been memorialized on the Ethereum blockchain. A smart contract on Ethereum with code formatted in the shape of a monument to Dr. Li Wenliang, was created last Friday.

Just like other global epidemics, coronavirus already has a serious impact on the global economy, especially because it’s happening in China, that second strongest economy in the world. In the past Chinese investors have relied on Bitcoin to hedge against the yuan’s devaluation. While that might be one big factor behind the positive trend on the bitcoin’s price, if the coronavirus continues to spread in China and other places, it will hurt the global economy, including bitcoin.

Something bad can never be good in the long run.

Balaji Srinivasan may be right when it comes to the math about bitcoin and it will reach $100,000, but as far as the coronavirus goes, let’s hope its trajectory is already peaking.

Glasgow Economic Forum (GEF) is taking place in the first week of March (7-8 March, 2020). It’s an annual conference organized entirely by students of the University of Glasgow. The event is packed with ideas, discussions and fascinating insights by world-renowned speakers. Support the students and their efforts. If you’re a company, make a donation or buy tickets. Find out how you can help them!

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Source: https://dailyfintech.com/2020/02/17/bitcoin-price-surges-is-coronavirus-behind-it/

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