Bitcoin is up by about $1,000 since yesterday to now stand at nearly $9,200 in what looks like a mini-bull run.
That’s on increasing volumes with most other cryptos up too, sending eth over $170 and BCH to near $400.
This rise appears to coincide with increasing concerns over an outbreak in China where some 50 million people are in quarantine.
The latest official figures are some 4,500 infected, mostly in Wuhan where the outbreak occurred. 106 are dead.
Russia has just closed its border with China. Hong Kong has partially closed it, with the economy there expected to take a hit.
Many businesses are asking people to work from home. Some have closed factories. There are speculations 1% of the GDP may have been hit already. How long this will continue remains unknown. Key facts, like how it transmits or the fatality rate, are also not fully confirmed.
Interestingly CNY is not reacting much and after falling somewhat yesterday, global stocks are slightly in the green today.
Bitcoin, The New Safe Haven?
Why bitcoin is reacting to all this is not too clear except that if there’s a hit to stock markets you’d expect a flight to safety, with bitcoin’s limited supply so making it a good candidate.
That’s especially because the functioning of the banking system might be affected depending on how the situation unfolds as if people can’t go to work then banks might close.
Bitcoin is digitally native and global, so it’s functioning wouldn’t be affected. Hence potentially making it a good store of value if one is on the move or for online commerce.
In addition as the economy might take a hit, you might expect money printing to cushion it, with CNY so potentially devaluing which tends to be reflected on bitcoin’s price.
The above is the most likely reason for the rise, but it might also be at least in part due to the anticipated expiry of CME futures this Friday.
During the bear market this futures expiry used to decrease the price. Now that we’re in less of a bear market, whether it will turn to increase the price remains to be seen.
The most likely explanation however is the new safe haven status for bitcoin which has been proven further by the recent events in China.