HOW REALISTIC IS THE BITCOIN COVID - 19 RELATIONSHIP?
2020 will go down in history as a period of enormous financial and health challenges.
The global population has hardly struggled in terms of the economy and the threat to life for decades, with COVID-19 unleashing an unexpected spell of uncertainty.
2020 will go down in history as a period of enormous financial and health challenges. The global population has hardly struggled in terms of the economy and the threat to life for decades, with COVID-19 unleashing an unexpected spell of uncertainty.
However, as well as the pandemic, the movement of Bitcoin, the world's largest cryptocurrency, has also caught the attention of many. Bitcoin's price performance was fraught with volatility, and several studies were conducted to analyze a pattern between the two independent institutions.
April December 31, 2019 to April 29, 2020, a wavelet consistency analysis was conducted between daily COVID-19 losses and daily bitcoin prices.
After applying the wavelet approach method, COVID-19 levels were found to have contributed to the increase in Bitcoin prices. In fact, the effect on correlation statistics was most commonly seen in the period after April 5. The same is confirmed by the charts here. Here, the yellowish region highlighted in the chart below was an indication of the increase in BTC's price relative to COVID-19 losses.
Correct calculations do not mean correct assumptions
While there were no errors in the data-centric aspects of the study, many factors affecting the price of Bitcoin over the period mentioned above were not taken into account by the study.
For example, the impact of bitcoin splitting was undeniable during April's rally. In fact, even Google has recorded an increase in search volume for” Bitcoin halving, " with the majority of the community dependent on updates on BTC's valuation.
In addition, Bitcoin's fundamentals have also improved, and these factors have been identified as the main catalysts in the sector that keep market sentiment and momentum positive.
The correlation between COVID-19 and Bitcoin, as noted above, only increased during the month of April. To get a clearer idea, it is important to determine the rate of increasing cases with the help of who status reports.
January to February, when the correlation between the price of BTC and COVID deaths was low, the number of cases increased by 77 percent, according to the calculations. From February to March, the rate dropped to 76 percent, and the correlation continued to be small.
To be fair, studies that examine and correlate Bitcoin's performance solely based on the impact of COVID-19 are controversial, mostly because it does not consider Bitcoin to be a traditional entity.