The cryptocurrency market was hit by a record price collapse on Thursday, March 12. The Bitcoin exchange rate has fallen by more than 25% — below $6,000 for the first time since May 2019, followed by a short bounceback. The total market capitalization of crypto decreased by a quarter to $172 billion.
According to analysts, the global financial market panic was triggered by two black swans: the spread of coronavirus and the rapid oil prices fall. Black swan is a concept that describes an event that comes suddenly and has a major effect on something. Coronavirus was discovered as unexpectedly as these birds, while another black swan suddenly flew in the oil market. The phrase is based on an ancient saying that assumed black swans did not exist. This saying was later reinterpreted after black swans were discovered.
The World Health Organization (WHO) announced Thursday that the new outbreak has become a pandemic in the world. According to recent estimates by WHO, the total number of coronavirus infected people worldwide exceeded 124 thousand, of which more than 4.6 thousand died. The biggest number of cases is being registered in China (more than 80 thousand people), Italy (more than 12 thousand people), Iran (9 thousand), South Korea (more than 7.9 thousand people) and France (2.3 thousand people), as of March 12, 2020.
Additionally, the pandemic caused large cryptocurrency conference cancellations. Subsequently, Bitcoin2020, TOKEN2049, and Paris Blockchain Week 2020 were rescheduled, and EDCON and Nitron were cancelled. Furthermore, it also affected the market’s overall mood and led to the entire market collapse.
At the same time, the securities’ value and the cryptocurrencies were pressured by a decline in the world oil prices. On Thursday, oil continued its brutal week, with benchmark U.S. down to $31 a barrel.
The fall of cryptocurrency prices is caused by an overall panic in the stock exchange which is forced by coronavirus and oil prices fall. Against the backdrop of a massive collapse of exchanges, players began to rebuild their investment strategies and, in particular, sell cryptocurrencies.
Overall, we can say that we are currently in a fairly uncertain situation. The news of the next days and weeks will determine the direction of where things will move next. A further rise is absolutely possible, but isn’t a must. The current pandemic is not a permanent condition. Thus, the value of cryptocurrencies may begin to gradually recover in the coming months. Therefore, it may be worthwhile at this point, if one is also convinced of the positive long-term future of Bitcoin, to increase their holdings.
Disclaimer: This article reflects its author’s opinion only and is not financial advice. We take no responsibility for the results of any trader’s decision or action.