China quarantines notes
The coronavirus has been making the headlines in the global media for weeks. More than 70,000 people have been infected with the pathogen to date. The “Land of the Rising Sun” reacts with drastic measures and quarantines banknotes. At the same time several billion Yuan are printed. We take a look at current events and possible consequences for Bitcoin.
Number of infected people continues to rise
To date, more than 70,000 infected persons have been confirmed, many experts assume a significantly higher number of unreported cases. The coronavirus has claimed over 100 lives in the past 24 hours. According to new findings, the pathogen could spread in the throat area rather than in the lungs. The viruses leave the infected person’s body by coughing, sneezing or similar means. It is questionable whether one can also become infected through contact with surfaces, via smear infection. This would mean that contact with bank notes could lead to infection.
With the large-scale cash quarantine, the banks are currently disinfecting used cash notes, which are subsequently sealed for 7-14 days. At the same time, Chinese money printers are running at full speed; over 4 billion yuan have been reprinted in recent weeks.
Effects on Bitcoin?
Experts increasingly see a direct correlation between the Coranavirus and “digital gold”. Initially, the persistent pathogens had an enormous impact on the Chinese New Year celebrations. Metropolises such as Wuhan were sealed off and public events were cancelled. Investors feared quick setbacks for the global economy. In the past, crises usually had a positive effect on Bitcoin.
Bitcoin as a safe haven
The USA-Iran crisis already showed a few weeks ago that Bitcoin represents a “safe haven” for many investors. In contrast to many FIAT currencies, BTC units cannot be reprinted indefinitely. The upper limit of 21 million BTC was implemented by Satoshi Nakamoto in his famous white paper. In addition, the inflation rate of the crypto currency will drop to a value of about 1.8% after the next Bitcoin Halving Event. Bitcoin is gradually gaining a reputation as a crisis-proof “Store of Value”, even in the mainstream.
Bitcoin safe from pathogens
Another advantage of cryptocurrencies is that they cannot transmit physical viruses due to their digital occurrence. What sounds strange at first sight turns out to be true in the current situation. In China, most of the inhabitants already do without cash and smartphone payments are used by the general public. As a result, the “cash quarantine” should have little effect on the BTC price. In general, however, this example shows the added value of digital payment methods.
The BTC price on Monday
The Bitcoin falls below the resistance at 9800 USD at the beginning of the week and settles at a value of approx. 9630 USD at the time of the article. The total market capitalization fell by a whopping 20 billion USD in the past few days. The downtrend can be interpreted as a price correction. Since the beginning of the year, investors have been observing a permanent bull run. The upcoming Bitcoin Halving could even fuel the hype and FOMO (fear of missing out) in the days. Initially, however, Bitcoin is slipping back into the four-digit dollar range.
BTC dominance increases
Bitcoin is once again increasingly moving into the focus of investors. This is illustrated by a BTC Dominance Index of 62.6 %. The Altcoins experience a mixed Monday. Bitcoin SV puts the best performance (from the top 20) on the crypto floor with a price increase of just under 10%.