The global threat of COVID-19 has crippled the travel and tourism industries, tested the world’s capacity to respond to massive and rapidly growing healthcare challenges, and forced many other industries to adapt to the times lest they sink under the weight of “the new normal.” Even the notoriously disruptive cryptocurrency markets have felt the economic effects of the virus.
It’s no secret that the markets for Bitcoin and other cryptocurrencies have always been highly unpredictable. From Bitcoin’s all-time highest valuation of $20,000 in late 2017, the price dove down to around $14,500 by January 2018, and has fluctuated ever since. This characteristic volatility has recently taken on new levels as cryptocurrencies come face-to-face with the global pandemic.
Trading platform Plus500 has charted the volatile fluctuations of the top cryptocurrencies following the global December 2019 COVID-19 outbreak. Bitcoin started 2020 at $7,000, which steadily increased throughout January. On February 9, it crossed the $10,000 line and stayed around this range for some time. The Guardian recalls how this sudden upturn was fueled by investors looking for safe haven opportunities amid pandemic fears and private/public shut downs. After that, Bitcoin then dipped to around $8,000 to over $9,000 until early March. And throughout March, the price has steadily dipped.
It was March 12 when Bitcoin dropped down to around $6,000 from being worth over $7,200 across various exchanges from just the day before. Not surprisingly, this was exactly one day after the World Health Organization (WHO) officially declared COVID-19 as a pandemic. While many believed that disruptive cryptocurrencies would fare inversely against traditional markets, both immediately felt the economic ramifications of the dreaded coronavirus. Following pandemic fears that made global economic recovery uncertain and risky assets even riskier, Bitcoin Cash took a 31.1% hit, along with Ethereum and XRP which fell 28.3% and 23.2% respectively on that day.
Since then, cryptocurrencies have only slightly recovered, with Bitcoin a little over the $6,000 mark. Be that as it may, it remains to be a fact that the COVID-19 shut downs have increased interest in digital assets – before, during, and after the WHO declaration. From late February to the end of March, the Chinese search engine Baidu saw a 183% increase in searches for Bitcoin. Ahead of the market crashes, Google searches for Bitcoin more than doubled in this time as well.
Meanwhile, cryptocurrency exchanges have also reported spikes in the number of trades and users throughout the month of March. “Despite the market downturn, Binance.US is seeing unprecedented trading volumes, with especially active trading in Bitcoin,” details Binance.US chief executive Catherine Coley. “Bitcoin’s recent jump while the rest of the market tumbles proves that unlike traditional companies, Bitcoin can and will survive without bailouts.”
While crypto prices are again at historic lows, COVID-19 has undoubtedly increased interest in cryptocurrencies and other digital assets. Considering both these factors, it remains to be seen whether or not cryptocurrencies will bounce back this year, or if Bitcoin will regain it’s all-time highest valuation of $20,000 anytime soon. But with more people looking at the value of digital currencies, there could soon be a big uptick in the cryptocurrency markets.