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Everything you need to know about the impact of Coronavirus on cryptocurrencies


Coronavirus is not something we can take lightly. The disease that emerged in China and has monopolized the headlines of the world press in recent months, is affecting every aspect of our life in society.

In fact, it has caused financial panic and even collapsed Bitcoin’s price. That is why we bring you this article in which we seek to explain everything you should know about the Coronavirus and its influence on cryptocurrencies.

What is the Coronavirus?

Very well, to begin with we must clarify that the Coronavirus as we know it. It is not really THE Coronavirus, but a specific strain of the family of diseases that bears this name. Which is also responsible for other diseases like the common cold.

So when talking about “Coronavirus” to refer to this disease, we would really be making a mistake from the point of view of medicine. Actually, the official name of the virus is “COVID-19”.

However, for ease of language, and given the widespread use of the term Coronavirus to refer to this disease, we will also use this word, having made the previous clarification.

This version of the Coronavirus would have emerged at the end of 2019 in the Chinese city of Wuhan, the capital of Hubei province, and the area of ​​the country most affected by the disease.

The epicenter of it was a submerged market in the city, where a person would have acquired a contaminated animal for personal consumption, passing the virus from the animal to humans through this route.

Submerged markets are open-air markets located in China, where rare, living and dead animals are traded in the same space.

The problem is that this poses great health risks for people who buy in these markets. Reason why they are prohibited by the Chinese government, although that does not prevent hundreds of them from existing throughout the Asian country.

From this market, the virus has been spreading throughout the world. Essentially causing respiratory problems among those who suffer the worst version of it. These cases can evolve into pneumonia and end in the death of the patient.

Coronavirus expansion

Although there are reports that indicate that the Chinese government has been aware of the existence of the Coronavirus since the end of last year, the truth is that the world did not find out the seriousness of the situation until the beginning of 2020. Since that was when they were finally forced to admit the existence of a threat in this virus.

Immediately, the Chinese government implemented drastic measures to try to control the spread of the disease to other regions of China and to other countries in the world. One of them was to establish a quarantine in Hubei province together with exhaustive control measures in the rest of the Chinese cities.

The latter include taking the temperature of all people when entering public buildings or parks. In addition to establishing quarantines for those who were in areas affected by the disease.

There has also been suspension of classes in the teaching centers of the People’s Republic of China. And even, the creation of QR codes to indicate the health of a person.

This allowed the speed of virus spread worldwide to decrease significantly. However, it was not enough to prevent the virus from reaching other countries with force.

It is worth noting the cases of Italy, South Korea and Iran, three countries that since the end of February have been the epicenter of the spread of the Coronavirus. This was because they could not establish the same control measures that the Chinese government used to keep the disease at bay for two whole months.

February 20 marked the start of the takeoff of the Coronavirus out of China
February 20 marked the start of the takeoff of the Coronavirus.

Since then, the number of Coronavirus cases in the world beyond China has continued to grow. Especially in European countries, which enjoy free transit between borders, and in the United States, a country that did not apply adequate sanitary measures from the outset to try to control the outbreak of the Coronavirus.

The situation has been of such gravity that Italy has recently announced the practical closure of the country. Seeking to prevent the disease from continuing to spread from Italy to other countries and that Italians themselves spread to each other.

However, at this point, that does not seem to be enough to lessen the impact that the Coronavirus will have on the whole of the West, according to the most recent projections:

Projections show France and the United States as the most affected countries, beyond China and other countries already suffering from the disease
The projections show France and the United States as the countries that will be most affected.

How serious is the situation?

The good news for the world is that the mortality rate from this disease is quite low. It mainly affects elderly people and those with previous chronic respiratory diseases. In fact, the cases of deaths of young people are very strange.

In addition, most people who are infected with the Coronavirus, suffer the disease as a mild flu. They may even go without the most acute symptoms of the virus, such as breathing difficulties or pneumonia, which is the cause of most deaths.

It is important to learn to differentiate between cold, flu and Coronavirus
It is important to learn to differentiate between cold, flu and Coronavirus. Courtesy: CNN

However, this does not mean that the disease is not dangerous at all. And much less that the measures taken to combat it in countries like China are exaggerated in some way.

We must remember that the current mortality and contagion rates of the disease are taken from countries where all possible measures are being taken to avoid the spread of the Coronavirus.

And it is that, unlike other diseases such as the common flu, which is wrongly compared to the Coronavirus on many occasions, Our body has no defense to fight COVID-19.

Therefore, in the absence of any measure to prevent the spread of the virus, it is highly likely not only an increase in the mortality of the virus, but also a collapse in the health services. The latter could even lead to further increase the death rate of the Coronavirus.

To avoid this, the countries where the Coronavirus has appeared have established measures known as “flatten the curve”. Referring to the curve that indicates the speed of contagion of the disease. Therefore, by flattening the curve, the number of people infected with the Coronavirus could be reduced and, therefore, deaths could be reduced.

This can be seen especially in the difference in death rates between those countries that have tried to “flatten the curve” and those that have not.

The former have successfully reduced the death rate caused by the disease, as well as venting their health services to provide care for patients. What turns out to be, as scientists fight to develop a vaccine against the disease, the only defense measure we have against the Coronavirus.

Flattening the curve is the main objective of governments such as China or South Korea
Flattening the curve is the main objective of governments. Courtesy: Prodavinci.

The measures taken with this objective seem to have achieved their effect. For countries like China, the epicenter of the disease, are experiencing for the first time a reduction in the magnitude of the emergency they are facing. Others, like South Korea, have also kept the crisis within bearable standards, with less than 1% mortality.

On the other hand, countries like Italy, which failed to flatten the curve, are facing death rates ranging from 4% to 6%, now requesting China’s help to combat the disease.

But the case of the United States is perhaps the most dramatic. Despite the resources that the American country has, it is also one of the nations that is conducting the least tests for Coronavirus in the world, which will ultimately result in higher infections in this country.

United States lags behind other countries in testing
The United States lags behind other countries in testing.

The effects of Coronavirus on the economy

Now, although undoubtedly the worst effect of the Coronavirus is the unfortunate loss of human life, the consequences it is bringing on the world economy are not negligible either. In fact, it has caused a real collapse of the financial system. Which has ended up affecting cryptocurrencies.

As we have already explained, one of the main measures to prevent the spread of the Coronavirus and “flatten the curve” is social distancing. Avoid social contact by reducing it to the minimum possible. This includes stopping normal work and asking employees to do so to work from home.

This can have a minimal effect on companies that provide services or whose activity is essentially online.

However, for manufacturing companies and other commercial activities, this measure can be fatal. Because it prevents employees from reaching their jobs, and therefore disrupts global supply chains. Something that has been observed since the beginning of the quarantine in cities in China.

The consequences of this on the world market were immediate. Firstly, with the fall in the price of oil, because if economic activity is reduced to a minimum, so is energy consumption. Lower energy consumption means lower oil demand and therefore a lower price of the oil barrel.

Furthermore, this drop in the price of oil was intensified due to the confrontation between Russia and Saudi Arabia to cut production and protect the price of a barrel.

Well, by not reaching any agreement, the Arab country began to cut the sale price of its oil and announced an increase in crude oil production to reach 10 million barrels a day. What caused the oil price to collapse, falling 30% in a single day.

But this collapse has not been limited only to the oil market. Traditional financial markets have also been affected by the Coronavirus.

Since Monday, world stock markets have suffered three days of absolute collapse, especially in New York. In it, the reduction of important indexes, such as the S&P 500, demonstrate the desperate situation in which many companies find themselves facing the panic caused by the disease worldwide.

The crash in the S&P 500 by the Coronavirus is getting worse. Affecting all countries in the world, including China
The drop in the S&P 500 is getting worse. Courtesy: Yahoo Finance.

The crypto market and other value reserve assets

In a situation like this, the normal thing for markets would be to look at value reserve assets. Those financial products that do not have a direct relationship with the world market. Which means that, when the international economy derails, these assets maintain or even increase in value.

However, this time this instinct is wrong. Far from increasing their value in the face of the panic caused by the Coronavirus, value reserve assets such as gold and Bitcoin have suffered dramatic falls in their price.

This fact has only added questions to financial analysts, for whom the effects caused by the Coronavirus are difficult to understand.

The fall of gold from the Coronavirus is quite clear. Courtesy: Yahoo Finance.
The fall of gold is quite clear. Courtesy: Yahoo Finance.

But, without a doubt, the most complicated case in recent days is that of the fall in the price of Bitcoin. Which has been much sharper than that of any other asset or market in the entire world. Having lost, only today, 48.10% of its value.

The collapse of the cryptocurrency is more acute than that of other assets due to the reduced size of its market. Which means that any movement made in it can have a huge impact on the price of the cryptoactive.

Bitcoin has collapsed under pressure from Coronavirus
Bitcoin has collapsed under pressure from the Coronavirus.

Where are we going?

If anything should have been perfectly clear by this point, it is that the Coronavirus is not something that can be taken lightly. By contrast, the disease originating in China is probably one of the greatest challenges humanity has ever faced in its history. And one against which society must remain united.

Especially while waiting for the results of the first tests of vaccines for Coronavirus. There are currently at least eight simultaneous projects worldwide, trying to develop the first vaccine against the disease. This is humanity’s best bet to slow the advance of COVID-19.

Meanwhile, “flattening the curve” seems to be the most logical strategy to avoid the worst effects of the disease worldwide. It is everyone’s responsibility to minimize the negative effects of Coronavirus in society.

Therefore, and until the pandemic is definitively controlled, at CriptoTendencia we will keep a permanent follow-up of the effects of the Coronavirus. Emphasizing global financial markets, and especially Bitcoin and other cryptocurrencies.

So we invite you to keep an eye on all the articles that we will prepare so that you are always informed about what is happening, through this link.

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