Markets Speculate More Money Will Flow into Crypto Market amid Coronavirus Fears
Markets in China have been speculating that more hedge funds will flow into the crypto market amid the coronavirus fears.
On one side, market participants believe that part of the money will withdraw from the Chinese stock market as a result of A-shares’ bad performance in the first quarter influenced by the outbreak of coronavirus epidemic in the country.
For another, the coronavirus quarantine in the country has led to production suspend, delivery delays and even order cancels of bitcoin mining hardware manufacturers. It will result in less supply of cryptocurrencies in the secondary market which may push the crypto price higher and draw more funds in.
Fears are now surfacing about the impact of coronavirus unease on the country’s economic growth. Such uncertainty on markets could often sparked bullish trend for bitcoin.
Influenced by the coronavirus scare, Chinese stocks have plunged as markets reopen this morning after the Lunar New Year holiday. The Shanghai Composite index fell nearly 9% before recovering slightly, while commodity prices also slumped. The fall came despite China’s central bank announcing new measures by inject 1.2 trillion yuan into the economy to ease the impact of the outbreak.
The Shenzhen Blockchain 50 Index fell 8.87% with almost all the concept stocks plunging on the first trading day for the Year of the Rat.
While Bitcoin, the top cryptocurrency, has been climbing over $9,000 in the past few days and is supposed to maintain its upward trajectory heading towards $10,000 level. On a month-to-date basis, bitcoin has gained over 30 percent nearing $9,600.
Yet the ups and downs cannot be majorly attributed to the virus. There have been plenty of other factors that have led to bitcoin’s volatility.
Keep in mind that until Friday the narrative was "Coronavirus pushing bitcoin lower". It now is "Coronavirus pushing bitcoin higher". Some people try very hard to create narratives. pic.twitter.com/OzQoNcIhcv
— Alex Krüger (@krugermacro) January 27, 2020
As of press time, the pneumonialike virus, emerged in Wuhan, a central Chinese city, has infected more than 17,000 people and killed 361. So far, the virus does not seem to be as deadly as SARS which killed 774 people from 2002 to 2003. Many patients with coronavirus have already made full recoveries. According to officials, most of those who’ve died were elderly or had other ailments that compromised their immune systems. While people’s psychological reactions to infectious diseases are overblown and do more harm than good.
It remains to be seen how bad the effect of coronavirus will be on China’s economy and all the capital markets including the crypto market. The whole country is currently fighting the virus and everyone is making their efforts.