Bitcoin prices surge as investors panic over coronavirus outbreak

Beijing time, February 3rd, as concerns about the outbreak of the new coronavirus have hit global stock markets, Bitcoin prices have begun to soar, and Bitcoin has once again attracted attention.

The price of Bitcoin is now hovering around $9,300, up nearly 10% this week and 30% since the end of 2019.

This is Bitcoin’s best start to a year since 2012.

Concerns about the rapid spread of the virus are one factor driving bitcoin's gains. The asset tends to rise when investors are nervous. But it's not the only factor driving bitcoin's price higher.

“The recent rise in Bitcoin can be attributed to the ongoing economic uncertainty,” Shaun Djie, CEO of digital token company Digix, said in a statement.

But the coronavirus is obviously the biggest catalyst lately.

" The rise in Bitcoin prices is related to the ongoing outbreak," Jay said .

In that sense, Bitcoin’s latest rally is similar to gold’s strong rally this year, which has also surged this month and is now trading at a seven-year high.

“Is this the top of the stock market bull run? Gold and Bitcoin prices are rising as investors appear unconvinced by last year’s stock market rally,” Marija Veitmane, senior multi-asset strategist at State Street, said in an interview.

Wittman added that Bitcoin, like gold, benefits from the fact that interest rates are low (or in some cases negative), which has led to a depreciation of the U.S. dollar against other currencies over the past few months.

Historically, bitcoin, gold and other cryptocurrencies and precious metals have performed well when investors bet that the value of large government-backed currencies will fall.

"There is a new consensus on dollar weakness," Wittman said. "Bitcoin and gold are likely to continue to perform well as safe-haven investments."

Jay agrees with Wittman.

“Gold and Bitcoin have become important alternatives for retail investors looking to protect their wealth,” he said.

Investors who view Bitcoin as a long-term investment should probably consider Bitcoin similar to gold. However, it can only be a small part of a portfolio, but investors should not go overboard, especially given the volatility of cryptocurrencies.

After all, the price of Bitcoin is still more than 50% below its all-time high of nearly $20,000 reached in December 2017, even though it has nearly tripled from its recent low of nearly $3,200 reached in December 2018.

Big tech and Wall Street’s embrace of crypto investing has become more mainstream, thanks to cryptocurrency initiatives from major tech companies like Square and Facebook .

“The support from Square and Facebook is undoubtedly very important for the entire crypto industry as it validates distributed technology and the entire digital asset and cryptocurrency space,” Jay said. “These companies’ adoption of crypto technology allows mainstream users to enjoy the versatility and flexibility of this technology.”

The rise of bitcoin futures trading on the Chicago Mercantile Exchange (CME) could also help bitcoin tie in with larger mutual funds, hedge funds and pensions.

Frank Holmes, CEO and chief investment officer of Global Investors USA (GROW), said that the biggest boost to Bitcoin could come if the Securities and Exchange Commission approved a crypto exchange-traded fund (ETF).

So far, the SEC has rejected many of the proposals.

“It’s no exaggeration to say that the bitcoin ETF is highly anticipated,” Holmes said.