Bitcoin revenues in online black markets are severely hit by the pandemic

The coronavirus pandemic has touched every corner of the world economy, even the deepest bowels of Internet commerce.

The data from the latest Chainalysis report

According to data from blockchain surveillance firm Chainalysis, customers have spent less bitcoin on darknet markets in the past two months, despite falling cryptocurrency prices. Darknet markets are websites that facilitate the sale of illegal goods, typically drugs, counterfeit currencies and weapons.

"Historically, the revenues from the darknet markets (volume of bitcoins used in the dark markets) have had a weak inverse correlation with the price of bitcoins," according to Chainalysis. However, this relationship has reversed in the past two months.

Bitcoins passed $ 10,500 in mid-February and dropped to $ 3,867 on March 13. As prices have gone down, the value of bitcoins sent to darknet markets has also fallen from $ 4.1 million to $ 3.2 million.

Black period for crypto currency

During the last quarter of 2019, the value of bitcoins sent to dark markets went from 3.9 million to just over 5 million dollars. During the same period, the cryptocurrency had fallen by almost 13% and had touched a minimum price of $ 6,400 in mid-December.

The latest change in correlation came in the midst of a health crisis triggered by the coronavirus pandemic. The new coronavirus began to spread more rapidly in Asian countries in February and hit the European and American coasts in March.

As a result, traditional markets have strengthened, triggering a liquidity crisis, which has seen investors sell classic liquidity like gold for cash, mainly the US dollar. Bitcoin has also been treated as a source of liquidity.

Darknet vendors may have panicked due to the sudden drop in prices and slowed sales for fear that the cryptocurrency could become useless in a catastrophic event. In addition, darknet customers may have cut back on purchases as investors tend to hold onto money during times of panic.

The pandemic also affects the drug and gambling markets

While the exact reason for the decline in darknet market revenue is unclear, the Chainalysis report suggests that COVID-19 has also made drug sales more difficult.

Recent reports indicate that Mexican drug cartels are having a difficult time supplying fentanyl, as the Chinese province of Hubei – a center of global fentanyl trade – has been hit hard as an epicenter of the epidemic.

Merchant services and gambling providers have also seen a drop in revenue in recent weeks. But historically, the revenue from gambling services has always had an extremely weak correlation with the price of bitcoin, as people rarely approach the game rationally and tend to consider it a fun activity.