Bitcoin: the coronavirus behind the rise in January?

Credit: Eivind Pedersen – Pixabay

In January, bitcoin price recorded its best performance since 2013. While the epidemic of coronavirus plunges traditional markets into uncertainty, some experts say that the digital coin is increasingly seen as a active refuge.

Last month, the bitcoin price grew 29% to over $ 9,000. This was his best performance for January since 2013, a year in which its price had increased 54% this month.

Several crypto-experts have cited the appearance of the coronavirus as a bullish factor for Bitcoin. The virus has already infected more than 17,000 people and has killed 361 people, causing uncertainty in traditional stock markets and replacing the trade war that is at the forefront of investor concerns.

According to Nigel Green, the boss of deVere Group, Bitcoin is behaving more and more like a safe investment in times of uncertainty.

The current upward trajectory of the bitcoin price is correlated with the spread of the coronavirus. The more individual cases identified, the more countries in the world are affected and the greater the impact on traditional financial markets, the more the price of bitcoin has risen, "he said.

However, this opinion is not shared by all players in the cryptocurrency market. For Mati Greenspan, founder of Quantum Economics, the rise of Bitcoin has nothing to do with the pandemic.

Everything that goes on in stocks doesn't seem to have any effect on the crypto market, which does not act as a refuge from the virus, nor does it sell with other risky assets, "he said.

The January increase could more easily be explained with the imminent arrival of halving, or halving the rewards for minors. An event generally much awaited by investors, who see it as an effect of scarcity.

In May 2020, the reward per mined block will indeed drop from 12.5 to 6.25 bitcoins. This mechanism operates every 4 years and aims to control the inflation of the token. During the first 2 halving, especially the first, the price of Bitcoin had greatly increased.

Last year, the price of litecoin also registered a strong increase a few months before its halving.