Why Cryptocurrencies Drop Like a Rock Nowadays?
Kriss September 21, 2021
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Why There Might Be a Correlation Between U.S. Covid Cases and Crypto Prices
- By Kriss
- Published on: September 8, 2021
To be fair to the Bitcoin bros (not great) and the XRP army (worse), the World Health Organization had began pushing the theory that Covid may be spread by banknotes about that time (while also suggesting that people not wear masks), which is now deemed to be “very unlikely.” Even if banknotes were a critical transmission vector, we doubt that “dirty fiat” could be held liable, given that the great bulk of it exists solely in digital form. When you can transact digitally using fiat money, why would you use Bitcoin, Cardano (ADA), or any other cryptocurrency?
In some ways, however, the crypto crowd was correct. Bitcoin’s price has climbed by roughly 525 percent in the almost 18 months before Covid-19 was declared a pandemic, from just under $8,000 to a three-month peak just above $50,000 on Monday. XRP has risen by a similar amount and is now trading at roughly $1.25.
And, regrettably, this has resulted in some fairly foolish thinking (extremely unusual in the crypto world, we know), particularly of the chart-crime variety:
Yes, it is an “interesting relationship.” Covid cases fell to their lowest levels since April 2020 when Ethereum (or “ether” as the token that drives the network is called) set a record high of just under $4,200 in early May (not greater than the bitcoin price at the time, though you wouldn’t know it from the above). According to the graphic, when bitcoin achieved a record high of roughly $63,000 just a few weeks ago, Covid cases had already plummeted precipitously. And when Covid instances peaked in early January, bitcoin experienced its worst drop in eight months. Isn’t it almost as though there’s no connection between cryptocurrency pricing and Covid cases? (Both crypto coins have increased in value in recent days, as have cases; there is no inverse relationship).
It’s worth noting that crypto prices began to rise more rapidly after Donald Trump lost the presidential election, so we might consider the possibility that Trump is Satoshi, and that now that he has more free time on his hands, he’s focusing on pumping the market. After all, it’s quite plausible that he’s a Japanese-trained quantum physicist (skip to 2:09 for proof of his thermodynamics expertise, and 2:45 for proof of his ability to read Japanese):
Maybe that’s a bit far-fetched. But, we hear you wonder, what’s behind crypto’s meteoric rise over the last 18 months? We don’t intend to imply that the pandemic hasn’t played a role; we believe it has, but not in the way that this chart implies — in other words, not because it’s some kind of safe haven for traders worried about the rise in Covid cases; the data don’t support that theory.
Given the opacity of the market and a certain rather large player whose name rhymes with weather, it’s always difficult to know exactly what’s driving crypto prices, but we believe it’s partly related to the same market madness that drove GameStop to the moon, as well as a desire for an alternative to central bank-issued money due to concerns about government overreach (by means of Covid restrictions).
We should also mention that if we were given labels on the Y-axis (which we aren’t), it would be evident that these “daily Covid instances” correspond to Covid cases in the United States. Because, while a chart of Covid instances in the United States looks exactly like the one above, a chart of Covid cases worldwide does not; instead, it looks like this (according to Google):
Given that crypto is sold globally, it’s a little unusual to map crypto prices against US Covid instances rather than global ones.
Another crypto enthusiast, who had drawn up his own chart just days before, is credited quite generously by our tweeter for the astonishing analysis:
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Kiara Sofia Smith
My current focus is blockchain technology and cryptocurrency. One could even call me a blockchain “enthusiast.” I have worked for almost a decade on several financial projects related to the stock market news, fundamental research and technical analysis for several blogs.
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