The deadly Coronavirus which has struck nations around the world is having an effect on how people are using Bitcoin, a Chainanlysis report has claimed.
The virus, whose more scientific name is COVID-19, has caused major economic issues for nations and markets around the globe.
Bitcoin’s price has also been affected. The leading token in the market had responded well initially to the virus outbreak and was being heralded by some as a safe haven asset much like Gold.
But in the past two weeks, Bitcoin saw historic falls in price. The token saw its value drop 50% in seven days, to lows of $5,000, losing 20% of its value in just minutes.
This was a disappointing moment for some as many felt this was set to be the perfect occasion for the crypto to rise, especially after it had been created in response to the 2008 financial crash.
So how has the Bitcoin community responded to this outbreak and its ever-growing list of consequences? Chainanlysis looked to find out with a report on Bitcoin usage in three areas: merchant services, gambling and darknet marketplaces.
The report found that all the services mentioned saw a dip in terms of action and usage. However, the correlation between price and the impact on each service defied most expectations.
The most surprising detail was the impact of the virus on Darknet usage. Usually, the price of Bitcoin does not see a drop in Darknet usage, yet this time it happened. Commentators have suggested that this could be down to less drug trafficking due to the disrupted supply chains.
The Chainanlysis report pointed to the decrease in activity between the Chinese fentanyl providers and Mexican drug cartels, saying:
“Recent reports point out that Mexican drug cartels are having a harder time sourcing fentanyl, as China’s Hubei province — a hub of the global fentanyl trade — has been hit hard as the epicentre of the outbreak. Such disruptions […] could be hampering darknet market vendors’ ability to do business.”
Despite this current impact, the usage of cryptocurrencies on the darknet has never been stronger. A Chainanlysis report found that the cryptocurrency flows had doubled in 2019.
Bitcoin Merchants and Gambling sees little change
Interestingly, Bitcoin merchants did not see a greater fall in usage as expected. This has led many to see this as a positive for the longevity of Bitcoin merchants.
On the other hand, Gambling’s fall was not expected as many felt with a bored public at home, the business would be booming. However, perhaps the lack of sport may have impacted action.