Bitcoin benefits as China’s stock markets suffer fallout from coronavirus

Coronavirus

The outlook for physical goods trading in and out of China looks dire (Image: Getty)

However, moves to pile investments into bitcoin appear to be picking up pace with a swathe of large fund movements into cryptocurrency over the last three days. Bitcoin spiked to a new high for 2020, briefly crossing $9,600 as China’s stock markets buzzed back into life on Monday morning with obvious signs of manufacturing and consumer goods being hit hard.

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The outlook for physical goods trading in and out of China looks dire for the next few months as officials in Beijing desperately work to contain an outbreak that has a death toll rapidly approaching 400.

Confirmed infections are also bearing down on 20,000.

Just as with the SARS outbreak from November 2002 and July 2003, the coronavirus has given China’s economic projection a nervous edge.

Eighteen years ago, stock markets in China and Hong Kong took a huge hit as SARS hit the headlines in a similar way to the latest virus.

Once scientists were able to contain SARS, the markets quickly returned to their natural levels.

Two aspects of the current trading narrative, though, may yet dictate a different outcome this time around.

Firstly, China and the World Health Organisation (WHO) were quickly able to respond to SARS in 2002 and contain its spread in enough time to ease the fears of fund managers.

Secondly, digital assets simply didn’t exist.

Bitcoin wasn’t invented until 2009, and certainly didn’t even register on the radar of most traders until 2017.

Now, however, scientists seem unable to restrain the advance of coronavirus – and this can only mean further panic will begin seeping into China’s markets the longer it goes on without being reined in.

Add that to the fact that fund managers are now warming to cryptocurrencies, and it looks likely that Chinese money will slowly but surely make a potentially massive difference to the shape of bitcoin’s value as the effects of a health crisis take hold.