Uncertainty about the coronavirus is already affecting financial markets around the world. The feelings of panic, at this point, are palpable. Coronavirus And Bitcoin.
After all, a global health emergency is no small thing. It is a new virus and the first infected were reported in the Chinese city of Wuhan.
However, the virus has been able to spread to other countries, and the situation is truly worrying. The media are covering the issue in detail and the ‘economic fear’ of an epidemic is invading investors.
Many of the measures that have been taken are necessary, but uneconomic. We still don’t know what impact all this could have on the economy, especially in China, but that’s the problem.
Uncertainty leads to fear and from fear to panic there is only one small step.
Bitcoin went up in price
Correlation or nonsense? Do we have reason to be concerned?
In any potentially dangerous situation, ordinary people tend to react in two radically opposite ways. A first group falls into absolute denial. They accuses the media, authorities and experts of being liars. Denial is usually justified by elaborate conspiracy theories.
In other words, nothing is what it seems and there are some extremely powerful villains interested in deceiving us to promote their evil goals of domination.
That is why there are many people who do not believe in the climate crisis, for example. It’s not that they don’t believe in science. It’s that they think that scientists are part of the conspiracy and are falsifying the evidence.
According to these conspiracy theorists, all that news about the end of the world is specially designed to spread panic, because a panicked population is easier to control.
Of course, there is another group that reacts completely differently. If the former sin by unbelievers, the latter sin by alarmists. According to this last group, we are practically on the verge of the apocalypse, and one sneeze in a Chinese market could mean the end of the human race.
If someone dies due to a rare virus, this automatically means that we will all die in the near future. According to the alarmists, the world is a dangerous place and it is only a matter of time before tragedy strikes at our doorstep.
Should we yell Fire!?
If the media and governments talk about a problem, it is likely that the problem is more serious than they say. Run for your lives! We are all going to die! The zombie apocalypse has finally arrived. It’s the day of reckoning.
Both positions are absurd. Nonsense. It’s falling into extremes. They’re obviously irrational positions dominated by emotions. The best thing, perhaps, is to take a middle course. I mean, come to your senses. That means weighing up the available information as seriously as possible and evaluating the facts with conviction.
Then, after processing everything, act according to the demands of the moment. We can’t yell “Fire!” every time someone lights a cigarette. But neither can we sit in the middle of a burning building and do nothing.
We looked for a few minutes at that whole coronavirus thing and its possible effect on the price of Bitcoin.
Coronavirus And Bitcoin
According to the press, we are looking at a new virus, the Coronavirus (2019-nCoV). The virus can cause pneumonia with symptoms of fever, headache and breathing difficulties. It could be fatal due to the collapse of an organ.
Because it is new, many things are still unknown and there are no special drugs to combat it. It is known to infect humans and animals alike.
It began in the Chinese city of Wuhan, but has now spread throughout the country. There are almost 50,000 infected people and more than 1000 dead.
Unfortunately, the disease has spread to more countries. The Governments of India and the Philippines have confirmed cases. But there are more. In Russia, so far, no cases have been detected.
However, the authorities have decided to close the borders with China as a precautionary measure. In the port of Civita Vecchio (Italy), a cruise ship from Spain with 6,000 passengers was blocked because of a possible case.
Many airlines have cancelled their flights to China. And preventive measures are being taken all over the world. The entire city of Wuhan is under quarantine and foreigners are being gradually evacuated.
The idea is to eliminate the virus by isolating it. If it’s not contained soon, it will be very difficult to control later.
Should we panic?
No. Or at least, not yet. Of course a new virus is an uncertainty and that worries me. Of course all necessary measures must be taken to contain it. And, also, scientists must be working on a cure and a vaccine.
All of this is fine. However, it’s important to look at everything rationally. So far the mortality rate of this new virus is 3%. This is relatively low, compared to the SARS virus rate in 2002, which was 10%. But it is high in relation to the common cold which is only 1%.
However, the coronavirus has so far caused more than 1000 deaths and the common cold causes 400,000 deaths annually. If we go by those numbers, the common cold is scarier than the coronavirus. But, the common cold doesn’t get as many headlines as the coronavirus just because it’s known and “common”.
Many experts have expressed satisfaction that the Chinese authorities have done much better this time than they did with the 2002 SARS outbreak.
In 2002, SARS generated worldwide panic, because it spread to nearly 37 countries. It infected 8,000 people and caused 750 deaths. Antibiotics were also ineffective, but eventually, thanks to the measures taken, it was brought under control.
So, there are reasons to be hopeful about the coronavirus. This story will surely have a happy ending. If we take all the necessary measures and there are no big surprises, we will be fine.
Why are the markets afraid?
Well, the fear that the markets feel is not entirely irrational. The measures being taken are necessary, but they also cause economic damage.
Some companies have been forced to halt activities and that will bring losses. Trade with China and the transport sector, in particular, will surely suffer because of all this. They will be losses in the short term, but losses, after all. It is not the end of the world (We hope so). But money will be lost.
It is very difficult to estimate the exact amount now, because the virus has not yet been controlled. That is the uncertainty and the economic fear of the situation.
So, many investors have decided to wait until everything is clear, to make final decisions. This wait is obviously bearish. We are not talking about a global crisis, but we are talking about a concern.
For example, the anniversary of McDonald’s in Russia was suspended to minimize the risks of the spread of infection. The celebrations of the 30th anniversary of the first McDonald’s in Moscow will have to wait.
As well as many events that have been cancelled due to the virus. Of course, this has an economic impact.
Coronavirus And Bitcoin
What does it have to do with Bitcoin?
Some people have suggested that the coronavirus has been good for Bitcoin and that this week’s upward momentum has the name of the coronavirus tattooed on his forehead.
Others, however, disagree. Because, like it or not, Bitcoin is an uncorrelated asset. It moves at its own pace. But the market is still plagued with people who stubbornly insist on seeing Bitcoin as gold (negative correlation).
However, the data does not support that theory. The problem is that we are very superstitious. We look for causes of Bitcoin’s rise or fall in the headlines of the day.
Sometimes we reach the absurd by searching for explanations. Unfortunately, the Bitcoin market is more complicated than that.