The media can’t stop talking about the COVID-19 coronavirus. Concern is growing every day, not only from a public health standpoint but a financial one. The stock market has taken a beating, entire countries are under quarantine, and now bitcoin has plunged by nearly 50% in the past month. Will this trend continue, and what effect will the coronavirus have on the cryptocurrency industry as a whole?

Bitcoin not a “Safe Haven” Investment for Coronavirus Fears?

In times of crisis, money traditionally flows into alternate “safe haven” assets like gold, which had been moving in near lock step with bitcoin for months. So what changed?

Bitcoin is often thought of as hedge against the actions of central banks, governments and inflation. Whenever rumors of fiat currency devaluation begin to circulate, or geopolitical tensions rise, bitcoin tends to go up. But because a global pandemic is a totally different type of crisis, investors are reacting to it in different ways.

It is worth noting that previous disease outbreaks like the H1N1 Swine Flu, Zika Virus and Ebola all happened within bitcoin’s lifetime, but they did not have the same kind of dramatic effect on bitcoin’s price. So what explains the recent dip?

One possible explanation could be that unlike those other diseases, the coronavirus originated in China, where a disproportionate amount of the bitcoin network’s mining activity is concentrated. Infection rates grew quickly in countries like South Korea and Japan, where cryptocurrency adoption is high. As quarantines increase and governments take increasingly drastic actions (the US just halted all flights from EU countries), investors become more and more nervous.

In such a situation, “FUD” (fear, uncertainty and doubt) is just as contagious as any disease. Just as investors dump stock holdings out of fear the market will go further down, it appears the same has happened with bitcoin. People simply don’t know what’s going to happen, so they panic sell to cut their losses.

It’s clear that this is bad for the price of bitcoin in the short term. But the coronavirus could have longer term effects on cryptocurrency that could be positive.

Could the Coronavirus Drive Adoption of Digital Currency?

In China there have been reports of the government literally “laundering” money by seizing physical currency over fears that contaminated cash is accelerating the spread of the coronavirus. Public health officials are sterilizing huge quantities of bills, and keeping them under quarantine for up to 2 weeks.

This could speed up the adoption of digital payments as an alternative to cash, a process that was already well underway in China before this pandemic began. This obviously opens the door for cryptocurrency to become more widely used as a payment for everyday purchases.

If you handle cash, there is a chance you could be exposed to coronavirus or some other pathogen…. But there is a ZERO percent chance of transmitting any disease by sending bitcoin to someone. Cryptocurrency could offer the right solution at the right time.

Given the existing popularity of mobile payments in Asia, such changes would probably happen there first. But the increasing outbreaks in Europe and the Americas could also accelerate this trend in Western countries, where cash and physical credit and debit cards remain preferred for now.

Will Bitcoin’s Price Recover from the Coronavirus Drop?

As Warren Buffet once said, “be fearful when others are greedy, and greedy when others are fearful”.

Is this a good time to scoop up bitcoin at a discount? Perhaps. We’re not in the business of giving financial advice.

Yes, BTC is dropping. Yes this is unnerving. But for all the FUD going around do to the coronavirus, one thing is certain:

This pandemic will eventually end. The markets will eventually recover, and bitcoin along with it. For now, crypto believers will continue to HODL and wait for the storm to pass.