CoronaVirus Triggers Bitcoin’s Worst One-Day Sell-Off in Seven Years
Bitcoin was not spared from the sell-off triggered by the Coronavirus outbreak that racked global markets on Thursday March 12 as its price got rattled down by more than 25% to push it below the $5000 range. The top cryptocurrency by market cap lost about $40 bln over a 24-hour period making it its worst one-day sell-off in seven years.
From a clear $7,916 range earlier in the day, Bitcoin slipped to $4,860 by Friday March 13 at 00.49 (UTC +01:00) according to a CoinMarketCap chart. Liquidity due to the seismic effect of the coronavirus and the fear of what the pending block reward halving could bring have been identified as top likely causes of the cryptocurrency’s sell-off.
The loss is incomparable to the $416.63 bln lost by the five biggest tech companies – Apple, Facebook, Alphabet, Amazon and Microsoft – the same day. European markets posted their worst one-day drop in history after the U.S. announced a suspension of flights from Europe for 30 days and stocks in Japan and South Korea saw heavy losses too in Friday morning trade.
It follows the Dow’s 10% plunge to record its worst day since the 1987 market crash on Wednesday just as the World Health Organization (WHO) declared the coronavirus outbreak a pandemic.
The rate of the coronavirus spread in China has dwindled, according to reports. Yet, more reported cases of new infection and deaths are being recorded outside of China, tipping the global economy to its edge. The several incoherent precautionary measures being introduced have not really helped the current state of the global economy and there are suggestions that things could still get worse. As the outlook on Europe and North America markets turns bearish, countries in other parts of the world are reeling in the outbreak’s multiplier effect. India may fair better though.
Earlier this week, oil prices crashed due to a disagreement related to the outbreak between Russia and Saudi Arabia sparking a sharp global sell-off in capital markets. While prices continue to fall, experts say low energy prices could be a silver lining for India as one of the world’s closely-watched economies. They believe falling prices could reduce India’s inflation and lower the cost of its import bills which could help narrow the country’s trade and current account deficits.
Meanwhile, in a show of strength, one of India’s cryptocurrency trading platforms has announced plans to promote cryptocurrency-related education, consumer engagement, and product awareness in the country with a $1.3 mln fund. With 0.5% of the population (or five million people) estimated to be active in India’s crypto space, CoinDCX’s campaign named TryCrypto seeks to push this number by 10x through a series of on-the-ground and online initiatives which include seminars, online courses, roadshows, and meetups.
“Only 5 million people in India currently hold cryptocurrencies—less than 0.5% of the population,” says Sumit Gupta, CEO of CoinDCX. “We believe, however, that by educating consumers and combating negative preconceptions of the industry we can boost the number from 5 million to 50 million, so that everyone can unlock the benefits of digital assets.”
This move is emboldened by the recent overturning of a two-year banking ban on crypto-related business which will allow Indian users to purchase cryptocurrencies directly on exchanges with Indian rupees for the first time. India’s potential as a sizable crypto market is huge. It remains to be seen what the recovery process would look like and what impact the pending halving will have on the market as a whole.