Has Coronavirus Really Helped Bitcoin To Surge? Here’s A Chart That Answers The Question

“Is Bitcoin surging because of the coronavirus?”, “Coronavirus helps make the case for Bitcoin”, “Coronavirus Bitcoin: ”Is Bad Actually Good?”, are only a few of the headlines that have appeared in online media outlets in the past few weeks.

Today marks a month since the first death case from coronavirus was reported in China. In the meantime, more than 1,300 people have died, while more than 60,000 are infected.

During the same time period, the Bitcoin price has gained around 30% by going from around $8,000 to hit $10,480 - the highest price seen since October last year.

Who is behind the rally?

It may look easy to draw the line of comparison and say that investors have countered a slump in the stock market by turning to Bitcoin and other crypto assets. Some analysts seem to believe that the spreading of the coronavirus has helped the Bitcoin price to surge.

On the other hand, there are also analysts who see the recent price surge as a rather technical move.

Still, Winterburn adds that “several large buy-ins on BTC these last few days have come from China,” which points to Chinese investors channeling their funds into crypto amid coronavirus uncertainty.

A banking collapse in Cyprus, a socioeconomic turmoil in Venezuela, or the assassination of the top Iranian commander by the U.S. military forces have one thing in common - they all helped Bitcoin moving higher.

Hence, the coronavirus outbreak follows the same pattern.

The Bitcoin halving event takes place in May, and some argue that investors are buying Bitcoin in the anticipation of this event, which will see bitcoin’s block rewards to miners cut in half from 12.5 BTC to 6.25 BTC.

The halving event, the third for Bitcoin, takes place every four years, and is considered to be one of the most bullish events for Bitcoin. The second halving, which occurred in 2016, saw the Bitcoin price grow over 33 times to finally hit record levels near the $20k mark a year later.

What does the chart say?

Let us now look at the BItcoin daily chart and compare the coronavirus outbreak with the price movements. As said earlier, the first coronavirus death case was reported on January 13th. A day later, January 14, Bitcoin bursts higher on the higher volume (see the lower rectangle).

Bitcoin closes the day with gains of more than 8%, or almost 700 points. The last time Bitcoin gained this amount of points, or more, was on October 25th. The rally continues in the coming days to ultimately hit levels above the $10k mark.

The stock market was hit harder in the last week of January when it became clear that the coronavirus will create more damage than SARS did in 2002 - 2003. Between January 24th and January 31st, the major benchmark index S&P 500 lost around 3.5%. During the same time period, Bitcoin gained more than 11%.

Since mid-January, the volume had also picked up, which further bolsters the argument that investors have channeled a portion of their funds into crypto assets.

Analysis: Bitcoin is a safe haven asset

In its relatively short history, Bitcoin has almost always reacted positively to geopolitical turmoil. Global concerns have investors worried about the high-yielding assets, such as stocks, and they eventually start looking for more resilient assets.

Coronavirus looks no different. We may debate on whether Bitcoin has started moving higher before the coronavirus outbreak happened or not. It is obvious that the world’s largest digital coin has made two legs higher since mid-December, before we even knew about the coronavirus.

It is apparent that the previous bullish rally has accelerated since mid-January. As seen from the chart, Bitcoin gained more than 8% a day after the first coronavirus death case was reported by the media.

In essence, almost every global crisis is an opportunity for Bitcoin to gain. We are talking about a massive crypto adoption as a process that has to be accelerated before we can truly regard Bitcoin as a means of payment that is being used in everyday life.

However, even more important is the fact that investors almost automatically turn to Bitcoin whenever there is a global crisis that impacts the traditional financial markets. If this proves to be the case in the end, Bitcoin may join Gold, Japanese Yen, Swiss Franc and other safe haven assets as an “automatic buy” following global turmoil of any kind.