effect of coronavirus on cryptocurrency market

Effects Of Coronavirus On The Cryptocurrency Market

There is no doubt about the fact that the coronavirus pandemic is affecting the world over the past few months. No matter whichever part of the world you are located, you must have been getting regular updates about coronavirus. This disease was discovered in humans in December 2019 in Wuhan, China, which had spread all over the world. This has made the WHO declare it a pandemic.

Since this is a global pandemic, it is expected to have an impact on different businesses around the world. This effect does not exclude the crypto industry. There has never been any pandemic occurrence since the invention of crypto coins like the coronavirus pandemic. However, this means that the crypto industry is not resistant to the factors that affect the traditional financial market. The way this is leading to the downfall of the global markets, professionals are getting worried that the continuous increase in this disease may cause worse effects to the crypto market.

Difficulty in Funds Raising 

The crash of the ICO market has led many blockchain startups to start looking for venture capital. However, with the continuous rise in the coronavirus pandemic, attracting investors is not easy as there is a sense of doubt and uncertainty among investors. It is becoming impossible to hold private sittings and investors are getting worried about investing in the crypto market. 

Cryptocurrency fundraising
Cryptocurrency fundraising

Meetings with potential investors are no more possible and critical talks are now limited to video conferencing. This has led to money reduction in niche markets, says Gustav Christopher Wagner, Block facts CEO

Cryptocurrency Conferences Cancelled

Immediately after the outbreak of Covid-19 to other countries from China; the crisis was not limited to China only but the whole world started to feel the impact. Once this became pandemic, and it started affecting the world’s powerful countries, the first set of crypto market conferences were canceled.

Cryptocurrency Conference rooms due to coronavirus
Cryptocurrency Conference rooms due to coronavirus

These cancelled conferences have badly affected many prominent cryptocurrency community representatives.  Almost all crypto market conferences were postponed/canceled by early March until the end of 2020.

BlockWorks Group Digital Asset Summit 2020 which was scheduled on 13th May 2020 in New York is now postponed

Although there is a total lockdown in some countries and states in the world, this does not fully affect people in the community. But still, it has a substantial financial impact on the investors of cryptocurrencies. Fortunately, there are several solutions to this problem in the modern world. Rather than getting a large number of people together in a hotel room in New York, they can easily organize events online. There are few online events such as Crypto Asia Summit: Free Online Event in May 2020 and VIRTUAL Data & Analytics Summit in July 2020

Remote Work Becomes Commonplace

One true fact about startup cryptocurrency owners and their clients, is the ability to use remote interaction from the onset of the project. This means that shifting to remote work will not lead to severe damage in the world of the crypto market. Therefore, the industry will improve on this format without much effect on the level of communication between the parties.

Remote work due to coronavirus
Remote work becomes commonplace

The use of remote work will be essential in the cryptocurrency industry because it is mainly based on communication among people in different time zones. Adopting to remote working will not be as hard for most cryptocurrency startups as it for other businesses, because they are already used to it. Many cryptocurrency owners and their clients were already practising remote working options even before the pandemic.

Covid-19 Effects On the Cryptocurrency market?

With the current pandemic in the world economy and the way it affects the main global markets, many investors have started showing their interest in safe assets. This follows the recent increase in the price of most of the trading commodities. For example, the price of gold has been rising since December 2019 when it registered up to 10% increase.

Effect on Bitcoin

This makes experts believe that the cryptocurrency markets would behave the same because they consider gold as a digital token. Fortunately, bitcoin showed the same pattern as gold. There was a piece of encouraging news in the crypto markets at the beginning of the year 2019. This time, the price of bitcoin was seen to increase from the beginning of the year at $4000 to $7200 (85% increase) by the end of the year 2019. During this period, there was an all-time rise of $12,500.

Bitcoin-crypto market capitalization
Bitcoin Price Trend in 2019 (Source: coinmarketcap.com)

Bitcoin hit $10,000 mark by February 10 2020, and this made crypto investors believe that there would be a continuous rise in the worth of bitcoin amidst this coronavirus pandemic.

However, the case changed as the price of bitcoin and several other altcoins started falling nearly after a month. This leads to the downfall of the crypto markets. This followed the declaration of coronavirus as a pandemic disease by WHO. There was a huge drop of about 13.8% during this period between 7th and 9th of March on the world market prices. 

crypto market capitalization
Total Market Capitalization Jan 2020 till April 2020 ( (Source: coinmarketcap.com))

Effect on Altcoin

Other coins like BitcoinCash, XRP, and ETH apart from bitcoin were also affected. These coins have been depreciating in price over the past 24 hours. While ETH fell by more than $120 (25%), Litecoin fell by $36 (23%), BitcoinCash by $179 (30%), and ripple fell by up to $0.17 (17%) by 17th of March, 2020. However, we have a total reduction of about $170B in the total cryptocurrency market capitalization.

crypto market capitalization
2020-Total Market Capitalization excluding Bitcoin( (Source: coinmarketcap.com))

This simply means that the crypto markets are also vulnerable to factors affecting the stock markets. However, experts still have the belief that these coins will rise again when the pandemic is contained and the situation returns to normal.

Coronavirus Will Not Stop the Existence of the Crypto Market

Although this pandemic is affecting the cryptocurrency market and it is getting worse but the situation will definitely be changed for the better. The world of crypto coins had witnessed many tough situations similar to this, before. Some of these hurdles which the crypto world is going through include hacks and scams, political issues, economic depression, exchange security issues, government regulations, and now coronavirus.

crypto market capitalization
Market Capitalization getting better Since April 2020 (Source: coinmarketcap.com)

However, the truth is that the cryptocurrency industry has witnessed a lot of issues since their invention, and the industry is still thriving. The industry will surely get back on its feet when the pandemic is over, and the situation returns back to normal. The cryptocurrency industry will grow again, and this virus outbreak will not put a stop to the cryptocurrency industry.

Conclusion

Every part of the world is now feeling this current situation. This does not exclude the crypto industry. With the increase in the number of affected people by the virus, we can only follow the current situation of the markets as no one can tell the future of cryptocurrency markets since this virus is still on the rise and this has contributed to the decline of the prices of all cryptocurrencies.

Although many crypto traders used to see crypto trading as a safe haven, this current outbreak has changed their perception. The initial uncertainty has eased down a bit and we can sense that the prices are showing some signs of stability. The most important thing is that traders and investors continue to explore remote work methods and communicate effectively. All we have to do is to keep on watching the crypto markets and follow the trends.