Third War, Coronavirus And Bitcoin – January Update
January was a generous month for the cryptocurrency industry. Bitcoin’s price went up, and it appears that this trend will continue further.
At the beginning of 2020, we gave you some predictions about the price of the leading cryptocurrency on the market. After the one month since then, the Bitcoin is performing the best since the last summer. What has caused this situation? Check our short update for the last month!
January: a turmoil month on the world
It’s always hard to tell the reasons why the price of the cryptocurrency has changed. Some people, however, usually point on the correlation between the market situation and recent events around the world. Significant news may make people more eager to buy/sell their assets – which also refers to the cryptocurrency industry. And the first month of 2020 was full of such prominent events.
At the very beginning, all world was on the edge of the third world war – at least according to various memes on the Internet. But the tensions between the USA and Iran were serious, and the risk of the conflict in the Middle East severe. Any turmoil in this oil-rich region has an impact on the global economy, and this time was no different. The fear of the potential outcome of the conflict causes people to buy assets believed to be secure for less stable times, and bitcoins were ones among them.
When the sensations caused by the USA-Iran situation began to fade, a new global threat arose on the horizon. The coronavirus outbreak in Chinese city Wuhan, causing a major commotion in the worldwide media. The city remains under quarantine, and the number of victims in the day of writing this article is 106 deceased citizens. In the meantime, the price of Bitcoin grows even further. Is there a coincidence between those two events?
Is coronavirus good for bitcoins?
The outbreak of coronavirus appears to be a similar sign for the cryptocurrency market as the situation in the Middle East was at the beginning of the year. The correlation between the virus and Bitcoin price is noticeable in the price spike appearing in Asian trading hours, as CoinDesk has noticed. The fear of eventual economic consequences of the outbreak is likely to cause local traders to buy secure assets.
However, the coronavirus shouldn’t be seen as a potential long-term boost of Bitcoin’s price. The eventual consequences of persisting outbreaks are no good for the economy in any way. If the situation continues to get worst, the cryptocurrency market will surely feel it. But as for now, it appears to thrive.
It’s also not sure how the coronavirus will influence Chineses ongoing plans for the blockchain technology development and introduction of their own stablecoin. If the virus will get out of control, it might endanger the local economy, which won’t be a good sign for a digital yuan.
New year enthusiasm
Even if the recent events could significantly increase the market, we shouldn’t forget about the long-term development of the situation in the cryptocurrency industry. Although the end of the last year was rather bearish for the Bitcoin, the leading cryptocurrency, according to the market capitalization was back then in a far better form than in the previous one. The stable situation was a good start point for 2020, and the current performance may also originate from it.
It is sure that we can call the current trend as a bull market. But the one question still remains: will this appear to be a long-term situation or just a temporary event? If the current trends are mostly dependent on the recent events around the world, the eventual escalation of the coronavirus outbreak may hurt the market badly. But if the virus threat will be resolved (what is more likely to happen), the price may get stabilize or even pull back.
On the other hand, we have an incoming halving on the horizon, and Bitcoin traders’ preparation for this event may already begin. An upcoming reduction of miners reward should, in definition, encourage the market to compensate it and make the process of maintaining the blockchain again profitable. But as the last Litecoin halving showed – such a scenario isn’t necessarily a sure one.
Nevertheless, now we are happy to witness Bitcoin’s comeback once again. But we don’t know what new the incoming months will bring. And since the current price might originate from some global events – we should watch the situation with great attention.
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