Kanalcoin.com – Is the corona virus scaring investors in the cryptocurrency market? The people in the industrial world are hesitating.
The cryptocurrency market has lost $40 billion in market cap since Sunday. Meanwhile, US stocks failed to rally on the day and have lost $2.5 trillion over the past two days. And what is happening is the increasing fear of the corona virus pandemic which means the slump is not necessarily coming but could this be a sign of a thaw in the crypto market.
Many say that digital currencies are often hailed as “safe assets” in times of crisis, a seemingly obvious answer to why their prices have fallen sharply against the US dollar. Bitcoin is down more than 6% in the last day. This is a sign that the corona virus is having an effect on digital currency investors that makes them scared.
According to the Centers for Disease Control and Prevention (CDC), when person-to-person transmission occurs, healthcare systems appear to be overwhelmed, while schools, businesses, and government services can see many of them getting sick. The transportation industry has been hit hard, but the bottom line is this: Economic production may slow.
The global gloom appears to have caught up with the U.S. stock market. The Dow Jones Industrial Average has fallen more than 8% in the last five days.
But what about cryptocurrencies?
Many crypto proponents say Bitcoin and its ilk can be a safe haven in times of economic trouble (See: Venezuela and its incredible economy). Conversely, their prices have deflated as well. Bitcoin, which was valued at just over $9,943 on Sunday, is nearing $8,800 at the time of writing. In just the last 24 hours, BTC has lost 6% of its value. Ethereum fared even worse, with losses approaching 10%.
It’s hard to know what’s really going on, said Vega Protocol co-founder Tamlyn Rudolph, who had a knack for financial calculations and cutting in energy trading before jumping into crypto.
Rudolph told Decrypt: “If there is a more mature and broad market around bitcoin, including one that provides forward-looking indicators, such as variance swaps, hash-rate futures, liquid options, (geographical) mining product distributions, then prices move in these markets will allow traders to analyze and better understand why the underlying (bitcoin) moves during market events like these.”
Rudolph told Decrypt: “If there is a more mature and broad market around bitcoin, including one that provides forward-looking indicators, such as variance swaps, hash-rate futures, liquid options, (geographical) mining product distributions, then prices move in these markets will allow traders to analyze and better understand why the underlying (bitcoin) moves during market events like these.”
According to Mashinsky, increased volatility in stocks and commodities means people are turning to gold and cash. “Bitcoin is no exception,” he said.
(*)
