The coronavirus outbreak has been said to be one of the main drivers of Bitcoin’s price in 2020. Bitcoin spiked by 45% this year and performed even better than traditional assets. However, the price spike is nothing of a coincidence since it was also triggered by the increasing spread of coronavirus. This is because investors have fallen back on Bitcoin as a safe haven amidst fears of a global economic meltdown.
Coronavirus Death Toll Hits 2,933
As of February 29, 2020, the coronavirus death toll sits at 2,933. The virus, which originated from Wuhan, a city in China, moved from Asia to other continents except for Antarctica. Fears that the virus may trigger a global economic meltdown has caused many investors to hold their wealth in Bitcoin, an asset that is uncorrelated to the world.
In early January, Bitcoin was priced around $7,100 but when news about the epidemic went viral, the crypto asset made major leaps in price. And for the first time since September 2019, Bitcoin revisited the $10,000 price level. On February 13, 2020, Bitcoin’s price hit a year’s high of $10,500, representing a 45% price increment in less than two months.
Bitcoin Makes More Significant Leaps Compared to the Stock Market
And while these surges were occurring in the crypto market, the stock market also traded in the upside. But unlike Bitcoin which made huge leaps, these traditional assets surged gradually. Gold, for instance, spiked by 3% while Nasdaq 100 and S&P 500 surged by 8.5% and 4.3% respectively.
Consequently, the more significant increment in Bitcoin’s price is evidence that people are resorting to the asset as a safe haven. Time and again, it has been noted that Bitcoin serves as a hedge against economic and political uncertainties. And now, there are speculations that the world may be heading for a recession due to the epidemic.
For starters, companies like Foxconn, a maker of Apple iPhones, and tech company Huawei temporarily stopped operations in the East Asian country after the virus went rampant. The virus has now hit 47 countries and analysts have warned that it could impact on factories’ supply chains and even affect the demand for goods.
Financial Markets Experience a Downtrend
Currently, the overall financial markets is experiencing a downtrend. Bitcoin’s price at the time of press is $8,656 signifying a 17% dump from its year’s high. Also, the FTSE 100 is down by 3.18% while the Euro Stoxx 50 has tanked by 3.6%.
For Bitcoin, on the other hand, expectations are high that its halving in May can potentially surge its price to new heights. The latter is a result of its historic price movements, where it spiked significantly after its halving in 2012 and 2016,