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Coronavirus cure taking time, and that’s bad for Bitcoin

5


Whatever your position, and that of the world’s decision-makers, the Coronavirus spread. The challenge now is to lessen the possibility of a global pandemic, and it falls on the western world, being bad for Bitcoin.

In an environment with the Coronavirus challenging many countries in the world, many wonder how much China has been responsible for its expansion. For example, there are those who say that China had a delayed reaction, while there are those who praise the measures taken in Wuhan city and Hubei province. However, most states do not have the means to completely block a state, province or nation at the scale of these two mentioned.

What is there to do?

One way to understand how the western world prepares for the Coronavirus is by looking at what is happening in Italy. This is because this is the most affected country outside of China.

Italy recently closed the entire country after its quarantine in the north proved ineffective. However, citizens can still travel to work, shop for food, and even eat in restaurants. While the measure has certainly limited people on the streets, it is also a half measure against Coronavirus.

The West must join China in this crisis caused by the Coronavirus, which has already been classified as a pandemic. In waiting for solutions, the world’s economies are affected, and even Bitcoin may indirectly suffer in the long term.

Some additional measures against the effects of Coronavirus

Other measures that have been chosen to be made are adjustments in fiscal policy, or specifically in public spending. For example, in the United States there is talk of financial packages to eliminate the payroll tax, and protect hourly workers from lost wages.

Several states have declared an emergency to unlock public health funds. At the same time, President Trump and the White House continue to emphasize that the administration is responding well to the crisis. On the other hand, central bankers and policy makers from around the world recently met to discuss how to synchronize fiscal measures and stimulus packages.

They do not have many options since interest rates remain at or close to the lowest levels of all time, so these measures are expected to save some time to fight the Coronavirus. It’s a pretty big bet, and not one that’s guaranteed to succeed.

Because this crisis is not demand driven, but is the result of a supply shock, the solutions approach must take this fact into account. I mean, it doesn’t matter how much money people have if they can’t spend it on anything.

Implications for the price of Bitcoin: in the short term the price may rise

After Monday’s sell-off, equity markets rebounded on Tuesday in response to expectations of further interest rate cuts and fiscal measures.

Why does this help Bitcoin?

Until now, the Coronavirus has rocked Bitcoin’s narrative as a stable store of value, at least for the time being.

Currently, the price of US Treasury bonds and gold are reaching all-time highs in price and lows in performance, Bitcoin is behaving more like traditional stocks.

However, in the long term, Bitcoin appears to be vulnerable if these half measures proposed by Western governments are unsuccessful and markets continue to fall. Given the fact that we still don’t know everything about how the virus is transmitted, people are still allowed to congregate in large crowds across the U.S. and the EU, we may still be far from the end of this crisis.

If the situation worsens, the focus will be on how governments can regain control over their populations. In this case we should all expect that these governments’ measures will work against the Coronavirus, but they could also turn into a pyrrhic victory.

Meanwhile, Bitcoin struggles to recover above the $ 8,000 level.



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