As the epidemic spreads into the global crisis, don’t expect Bitcoin to halve anymore!

Can Bitcoin, a small boat, remain unscathed in the global financial crisis? The answer is probably no.

On March 11, Geneva time, the World Health Organization (WHO) officially announced at a press conference that the new coronavirus pneumonia was classified as a global pandemic, and the degree of crisis has far exceeded the SARS in 2003. WHO Director-General Tedros Adhanom Ghebreyesus said that this is the first global pandemic caused by a coronavirus, and we have never seen a global pandemic that can be controlled before.

The novel coronavirus started in Wuhan, China. After the epidemic in China gradually stabilized, it broke out in other countries one after another, including Japan, South Korea, Germany, Italy, and the United States. Although the virus has a low mortality rate, it is highly contagious. There is currently no vaccine or effective medicine, which has caused great panic. Zhong Nanshan predicts that the global epidemic will continue until at least June.

The globalization of the epidemic has dealt a huge blow to the real economy. Countries have begun to block their borders, hindering international trade and the flow of people. The latest news shows that the United States has banned Schengen nationals from entering the country; manufacturing, offline commerce, sports and entertainment have all been shut down.

The reaction of the financial market was very intense. Global stock markets plummeted across the board on Monday, with the S&P 500 index falling 7% on the day, triggering the first-tier circuit breaker mechanism and suspending trading for 15 minutes. This was the second time in history that a circuit breaker was triggered. European Central Bank President Christine Lagarde warned that Europe could face major economic risks similar to the 2008 global financial crisis.

For the cryptocurrency market, there is a very obvious "resonance" in the global financial market downturn. The price of Bitcoin has broken through 10,000 US dollars before, and has fallen below 8,000 US dollars since March 8. It is currently fluctuating around 7,800 US dollars, and its market value has shrunk by more than 11 billion US dollars. All mainstream currencies have fallen by more than 10%-20%.

In general, there are many positive factors in the cryptocurrency market this year: the upcoming halving of the output of Bitcoin and several mainstream currencies; the relaxation of regulatory policies in India, South Korea, France and other countries; the radical destruction of mainstream platform currencies such as OKB and HT, etc. However, in the context of the epidemic, these positive factors may become insignificant.

Bitcoin was originally considered to have certain safe-haven properties, but it was more of a reference to "failed states" where sovereign currencies were fragile. Citizens would buy Bitcoin as a safe-haven asset when major turmoil occurred, and there have been many cases in history where this has actually happened.

However, as the cryptocurrency market develops, several changes have occurred, which have completely shattered the fantasy of Bitcoin as a safe haven in this crisis. On the contrary, the price of gold, a real safe-haven asset, has reached a recent high:

First: In 2019, cryptocurrency derivatives and leveraged products developed rapidly, and institutional investors who had no faith in Bitcoin poured in. The speculative nature of cryptocurrency has far exceeded its safe-haven nature. After the good news was exhausted, many speculators anticipated the impact of the epidemic and fled at the high point.

Second: The emergence and large-scale use of stablecoins pegged to the US dollar, such as USDT, has withdrawn huge amounts of funds from Bitcoin and has become the first choice for cryptocurrency investors in dealing with crises. USDT has replaced Bitcoin as a safe-haven asset to a certain extent, and other non-stablecoins such as Bitcoin have been squeezed.

Third: In recent years, due to various reasons, of course, more regulatory factors, the integration of cryptocurrencies with the real economy has been quite slow. Iconic projects such as Libra and Telegram have been blocked, and the entire industry can only shift towards speculation. When the financial crisis comes, speculative products without real support will experience more serious capital outflows. (Some netizens joked that offline casinos, one of the largest physical applications of cryptocurrencies, have also closed down due to the epidemic.)

There are still nearly two months until the Bitcoin halving. From the perspective of the current epidemic situation, it is probably far from reaching its peak, and the impact on the global economy and financial markets needs to be evaluated later. From an optimistic point of view, it may subside in a few months; from a pessimistic point of view, it may last for a whole year.

In any case, it is difficult to expect the much-anticipated halving to bring positive market conditions. After all, the cryptocurrency market is still too small, even smaller than the market value of Alibaba. In the midst of the global economic turmoil, this small boat cannot remain immune.