The spread of Coronavirus or COVID-19 has been an unprecedented event, one that escalated from 1 to 1.5 million cases and from China’s Wuhan to across the globe, in just over a few months. And as the pandemic progressed, mass hysteria set in, across financial systems and global finance sectors worldwide, with the cryptocurrency market emerging to become a victim too.
This time it was a Virus
The volatile crypto-market recorded a major blow on 12 March, a day when the market collapsed in the blink of an eye. The world’s largest cryptocurrency, Bitcoin [BTC], embarked on an uncontrolled descent and like a pack of dominos, the entire crypto-market followed. The stock market woke up to a panic-stricken world too as stocks all across the board started to cave in. In fact, the market frenzy took down even the safe-haven asset – Gold.
Sticks and stones
Crypto-exchanges are to the crypto-market what the skeleton is to the human body, offering smooth functioning to traders. Even though everything is connected via the Internet, the virus did manage to affect these exchanges, with their physical offices soon needing to be shut down. In fact, while some exchanges directed their employees to work from home, others did not see much difference owing to a prevalent culture of working remotely.
AMBCrypto spoke to Sumit Gupta, CEO of India’s CoinDCX, who shed light on the nation’s 21-day lockdown amid the Coronavirus pandemic. Gupta said,
“We at CoinDCX, had been monitoring the situation for a very long time. Within the second week this month, we had directed all our employees to start working from home. The transition was as seamless as it could be.”
The exchange was one of the plaintiffs in the landmark ‘Crypto v. RBI’ case and according to Gupta, it is “Business As Usual [BAU]” for them as they crossed a total volume of $2 million on 27 March.
However, even though CoinDCX’s business remained largely unaffected after the shutdown, the market crash saw volumes of transactions taking place on the exchange, mainly triggered by panic selling.
Mining
As exchanges kept on the decentralized spirit, miners, on the other hand, could not. As volatility crept into the crypto-market, its impact was first noted in the cryptocurrency’s hashrate. China was contributing 65% of Bitcoin’s computing power and since the country was the epicenter of the virus, miners and mining farms were hit significantly.
Further, according to reports, PandaMiner, a mining firm based in China, had informed the community that quarantine controls had caused disruptions in business as usual. The company’s Chief Executive Officer Abe Yang had stated,
“Not only us, [but] most miner makers have been affected by the outbreak since their factories are based in cities like Dongguan and Shenzhen in Guangdong province.”
Apart from the difficulty in mining, mining equipment manufacturers have also been facing delays in productions and delivery. Due to Bitcoin’s halving being just around the corner, miners are looking for top-of-the-line mining models. However, due to a delay in production and delivery, the business has ground to a halt. Yang went on to add that mining machine production was one of the most affected businesses.
Moreover, the price crash of BTC added fuel to the fire as mining became unprofitable for miners and many decided to opt-out until they could at least break-even. With the mining difficulty re-adjusted, the Bitcoin network appeared to be gaining strength once again.
Other businesses
Meanwhile, other services and businesses offered by crypto also noted a downtime, especially after the fall of crypto and the stock market. Blockchain and crypto-conferences around the world had to be canceled or postponed due to the travel bans announced by most countries.
The tourism industry was hit hard as well, with numerous travel restrictions in place. The cancellation of such conferences was enforced when Zhen Yu Young tweeted on 11 March about him being tested positive for Coronavirus, after attending the ETHLondon Hackathon on 28 February. Young, the Co-founder of TorusLabs, after attending the event in London, had also attended a conference in Paris on 5 March.
Ripple, a real-time gross settlement system, currency exchange, and remittance network, created by Ripple Labs Inc. was also among the ones impacted. According to data provided by its On-Demand Liquidity service, the liquidity took a hit on the platform after crypto crashed and there was panic in the market. According to Brad Garlinghouse, CEO of Ripple, its global team had transitioned to remote work, with the CEO adding that historically, markets have been extremely resilient during such crises. He said,
“Our global economy is in uncharted waters, but what I’ve learned from history: markets are extremely resilient. No one has all the answers, but in times like this, we can always be kind to one another. Remember no matter where you are, we’re in this together.”
A step forward
Even though the outbreak of COVID-19 has had deep and lasting effects, the blockchain and crypto-community are making an effort to provide the necessary aid. In fact, even the mining industry is pitching in, with CoreWeave, a U.S-based miner on the Ethereum blockchain, redirecting the processing power of 6,000 specialized computer chips for research on Coronavirus. Leading the charge is the Binance Charity Foundation, an organization that has been raising money to fight the fight. The foundation donated $2 million in Crypto for medical supplies to countries that were worst-affected by the virus.
However, all efforts aside, the lack of cure has pushed the norms of social distancing, which is why the crypto-market continues to be affected. However, despite everything, it would seem that the market has ridden the initial shock of the pandemic, with the industry now back on track. While the world works towards a solution, everything on crypto continues to run on the blockchain.
