Au Contraire, CoronaVirus Spread Correlates With Bitcoin Sell-Off
Contrary to what has been speculated earlier in some quarters, there seems to be a correlation between the insidious spread of the coronavirus and the price of the top cryptocurrency, Bitcoin, a new finding by Santiment has shown.
The virus, officially known as Covid-19, has spread from China to several parts of the world including Europe and the U.S., where more infections are being recorded and its spread is yet to be curtailed – Italy has been the worst affected country so far outside of Asia with more than 130 reported cases and three deaths.
When Chinese authorities announced their decision to quarantine cash in some regions to sanitize them from aiding the transmission of the virus, there were suggestions that cryptocurrencies and other digital currencies would have sufficed for the transfer of value with minimal human contact to stem the virus’ spread. It also led to the question of whether the emerging asset class can join assets like gold to act as a safe-haven at times of economic or political uncertainty.
Santiment, a crypto charts and market insights provider for on-chain and curated data, seems to have come up with the result of testing that assumption. It claims the price of Bitcoin has correlated with more mentions of corona or coronavirus particularly over the past week as the rising spread of the outbreak seems to follow Bitcoin price drop. From over $9,600 on Feb. 20, Bitcoin fell to approximately $8,700 on Feb. 26 for the first time since January 26 leaving out the big question of whether to buy the dip or hold.
The firm says its Emerging Trends’ tool indicates that “particularly newsworthy (and tragic) days related to this subject” of increasing coronavirus mentions – as infection cases and death rates keep rising – have “correlation with price of crypto projects” and “it doesn’t appear to be a positive one.”
Our @santimentfeed 'Emerging Trends' tool is indicating that #corona and #coronavirus mentions have been increasing again as cases and death rates continue to rise. It does appear that particularly newsworthy (and tragic) days related to this subject do seem to have some pic.twitter.com/m1Q13YCO8L
— Santiment (@santimentfeed) February 25, 2020
It shows that as the total mentions of connected words (corona or coronavirus) increased – having crossed paths on Monday Feb. 24 – the price of Bitcoin started a nosedive afterward. While this finding may suggest a reason for the price drop, it also implies that the price dip could still continue until the virus has been significantly contained.
The outbreak’s spread has peaked in China, according to the World Health Organization. The attention is now on the new cases reported in Iran and Italy, as well as cases mentioned in France, Germany, Spain, Algeria and Brazil. Meanwhile, cryptocurrencies like Bitcoin – regardless of their not being tied to any central government or currency or for their being “decentralized” – have proven not to be “completely removed from global events like a virus outbreak… especially when it comes to China and Asia”, notes Frank Curzio, founder and CEO of Curzio Research.
The price slump also coincides with stocks falling sharply as the number of coronavirus cases outside China rose amidst talks of a prolonged global economic slowdown as the virus leads to major sell-offs. It saw about $1.7 tln wiped out of the US stock market value in two days.
growth rate. With new addresses continuing to be created at levels we saw for most of January (with just a modest decline since its 2-week peak), this is a sign that network health and growth rates still look solid.
3) Unique tokens being circulated has actually started to pic.twitter.com/3mTNzV1ixg
— Santiment (@santimentfeed) February 26, 2020
Yet, Santiment maintains that Bitcoin’s Daily Active Addresses are retaining their growth rate with new addresses still being created at levels seen for most of January. This indicates that the “network health and growth rates still look solid”, the firm says, adding that unique tokens being circulated have started to rise again “after seeing similar spikes in mid-January (before a big price rise) and early February (also before a big price rise).” The next few days and weeks would matter to the crypto space as other countries strive to contain the outbreak’s spread within their territories.