With much of the world waiting with bated breath, and often indoors, for a resolution to the Chinese coronavirus crisis, cryptocurrency analysts and enthusiasts are divided on how the health pandemic could affect cryptocurrency prices. There are a number of arguments that can be made for cryptocurrency prices moving either way, and ultimately it will be up to markets to decide which way prices will go.
The Bearish Case
One of the major reasons for downward pressure on cryptocurrency prices is the fact that so much cryptocurrency investment is centered in China. Major exchanges, major mining firms, and major cryptocurrency developers are all present in China and eastern Asia. Many firms are finding it difficult to meet with clients, raise funds, or do business because no one wants to be out in public. People want to hunker down indoors to ride out the crisis, hoping not to contract the coronavirus.
Many businesses, too, have shut down and may remain shut down through the end of February. With no business taking place throughout China, that means a lot less incentive to invest for any reason.
The Bullish Case
On the flip side, because so many Chinese are staying indoors, and because business isn’t being done face to face, that could incentivize more online purchases, indirect deliveries, etc. And since payments for those services won’t be made using cash, it could lead to more use of cryptocurrency for payment.
Because fears of the coronavirus are affecting stock markets around the world, there’s a good chance that cryptocurrencies may become stores of value and safe haven assets akin to gold. Bitcoin, for example, has already seen a pretty significant increase in value since the onset of the coronavirus crisis, and the longer the crisis continues, the higher Bitcoin’s value will likely get.
Cryptocurrencies have been through crises in China before, especially with the Chinese government’s crackdown on cryptocurrency trading. They’ll be able to weather the coronavirus crisis too, moving on to higher and higher prices.