Surging crypto rallies and the coronavirus scare — the 2 phenomena seem to be closely related, co-ordinate to many. Only this item correlation is not necessarily translating to causation, at least according to some experts.

Mati Greenspan, the founder of Breakthrough Economics, offered his insights regarding the credible connections between the two events. "So far, I don't see any directly correlation between the coronavirus and crypto prices." Instead, Greenspan pointed to the electric current altcoin rally as an indicator of a growing appetite for college-risk investments:

"In my interpretation at the moment, we're in an alt season and that by and large tells us that people are looking to take risk if they have a bit of actress cash. This is exactly what'southward happening in the stock markets also. It's almost probable that whatever is driving crypto at the moment is a 'risk-on' sentiment and not flight to safety."

While some consider the coronavirus scare as a possible goad for a shop-of-value narrative, Greenspan dismissed the notion: "I don't think anybody within of Cathay, for example, would be going 'OK, people are dying here, allow me go purchase Bitcoin.'"

BTC network is stronger than ever

Stories of Chinese crypto mining facilities being shuttered appear to have had lilliputian impact on Bitcoin (BTC) network hash rates. The network is chugging forth stronger than always with hash rates continuing to compete, surpassing all-time highs, co-ordinate to Blockchain.com.

If such shutdowns were of any significant scale, a network slowdown would be one of the clearest indicators of such a relationship, especially considering the loftier percentage of mining pools that are centered in China. As of now, it is estimated that somewhere between 65% and 70% of all BTC mining pools are concentrated in People's republic of china, according to CoinShares Inquiry.

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By observing mining pool activity on Coindance, one tin come across that the usual mining pools are up and running with piffling indication of weakness. A number of the world's most prominent mining pools are based in Red china, including Poolin, F2Pool, BTC.com, Antpool and ViaBTC. They announced to exist performing as usual.

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In an attempt to notice further details regarding the mining state of affairs in Prc, Cointelegraph reached out to Bitmain, whose spokesperson explained that the health scare had not affected the mining industry much, if at all. However, Bitmain declined to annotate farther on the situation.

Other narratives are at play

Greenspan explained that other narratives are playing a much greater role in current weather: "Equally far every bit narratives go, the halving is huge. That's 1 of the primary drivers of the market." Bitcoin'south mining block reward is set to be reduced by half in May, resulting in increased scarcity, causing a theoretical increase in the market price of the asset.

Additionally, increased instability in the Heart East might have sparked the electric current crypto rally, beginning in Jan. "The whole matter was gear up off… with the U.S. missile drone strike in Iraq... For the first time in [its] short history, we saw Bitcoin reacting to a major geopolitical event as a safe haven. That gave Bitcoin a lot of legitimacy."

Greenspan then dove into details surrounding what he feels is the strongest cause of the rapid rise in high-risk asset investment: key depository financial institution monetary policy.

"The more we see action from the fundamental banks, the more than nosotros encounter cash injections from the Federal Reserve, the European Key Banking company and the People's Bank of Mainland china. They're only pushing coin into the system and that coin has to find a dwelling."

Regarding the potential for hyperinflation, Greenspan pointed to recent economic fiascos of Venezuela and Zimbabwe, calculation that at some signal, the phenomenon will most likely take to kick in, just not everywhere:

"That isn't happening in the major economies like the Usa, Nihon and China at the moment... Even economists don't actually understand why there isn't any pregnant inflation after all the money that'south been pumped in there. It's the biggest economic puzzle of our generation."

Only what if it gets worse? Like… much worse?

When asked to consider the hypothetical possibility that the coronavirus might indeed cause a global turn for the worse, Greenspan turned his attending instead to the very existent possibilities approaching in the nearly future, saying: "The real concern here is the fact that mainland People's republic of china is on a self-imposed lockdown." The streets of Shanghai, he explained, are pretty much empty. This may potentially take meaning implications for the global supply chain of durable appurtenances, adding:

"Even Tesla, for all their stocks zooming and zooming and zooming, they take a huge giga factory in China, which is shut at the moment. It's not even operating. I don't know how they're going to brand their production quotas with their factory offline."

The analyst expects Q1 quarterly earnings to be disappointing. "The stocks aren't really reacting. There's this feeling — a feeling that's been browbeaten into the marketplace over the last few years — that no matter what happens, the central banks are going to come up in and volition be able to pave over any production caps with costless money injected into the markets."

At some point, this money-pumping miracle may reach a crucial turning point, and the coronavirus shutdown could exist the kicker that gets the ball rolling downhill. Fifty-fifty if a cure is discovered tomorrow, information technology'll make China look like it'southward been continuing nevertheless for effectually a month. Greenspan believes this will have repercussions:

"Information technology's like the butterfly result, where a butterfly flapping its wings in Chicago could crusade a typhoon in Tokyo. We have an entire country — the largest state in the world is offline at the moment. Everything will be affected past this."

In regards to the upshot of such economic woes might exert on crypto markets, Greenspan was non-committal: "How it will affect Bitcoin's price, I actually couldn't tell you. At the moment, I don't feel like it is, merely in the future, it could."