The Impact of Coronavirus Outbreak in China on Crypto Market: Negative or Positive?
First discovered in the Chinese city of Wuhan, the Coronavirus is forcing global businesses of all categories to scale back. Given China’s status as a crypto investment hub – it has the most exchanges in the Asia-Pacific region, which in turn has 40 percent of the world’s top 50, crypto space is concerned about coronavirus’ potential disruption of business and the impact on prices.
The blockchain space belongs to the science and technology industry, while the crypto space belongs to the financial industry. More specifically, the crypto space belongs to the alternative finance, together with gold, collectibles and commodity futures, PE / VC investment.
Therefore, from the perspective of capital, cryptocurrency does not have enough power to rise sharply in the short term as it is under great pressure.
With the emergence of stable coins, bitcoin has no obvious hedging function but is a volatile venture capital. This also explains why the USDT over-the-counter price soared in the week of severe virus outbreaks.
As we all know, China plays a leading role in the individual users and projects of the crypto circle, which can be concluded from the trading activity, trading number, trading capital volume, number of projects, the scale and number of exchanges, so it can be said that Chinese capital is the key to affect the cryptocurrency price. Therefore, the negative effects of the currency circle caused by the coronavirus will be magnified rather than decreased due to China’s influence in the crypto space.
There are also some “positive” effects of the coronavirus on the crypto space, as now few people talk about the tightening and suppression of regulatory policies that everyone worried about years ago. However, all offline activities such as meetup communication cannot be carried out, and technology development and innovation will also be affected, including public opinion’s focus on cryptocurrency will drop to a low point. Everyone’s attention is attracted by the coronavirus, so these impacts are more negative than positive.
After the outbreak of coronavirus, the three major exchanges Binance, Huobi and OK quickly set up a public welfare fund to donate 10 million Chinese yuan to fight the recent outbreak of coronavirus.
As we all know, most of the sources of customers, internationalization, distribution of offices and employees, and capital of Binance are overseas, while Huobi and OK are in China. Especially during the Chinese New Year, it difficult for most of the employees returned home to move domestically, let alone go abroad and return to work. Therefore, the operation of the two domestic exchanges overseas will be affected.