Bitcoin and Stocks React to Trump’s Positive Test for Covid-19
One of the top news these days is related to the fact that the President of the United States has tested positive for Covid-19. Along with other close contacts, Donald Trump and the First Lady have been infected with the new coronavirus that has been tormenting the entire world this year.
While the President has declared that they are feeling well and remain in quarantine, the news is on countless headlines worldwide, as there are many implications to this unfortunate event. This one crucial positive test has numerous and severe consequences in many directions. As we will show below, the financial market had a quick reaction, as stocks, gold and Bitcoin altered their trajectories.
Reactions on the Financial Market
Such a diagnosis for the President of the U.S. would have a significant impact at any moment, but right now, the consequences can be more significant. With the elections coming soon, the political tension is even higher, leading to economic and financial responses. Though it seems he should be able to continue with his usual duties while in quarantine at the White House, Trump’s uncertain health situation has many effects, including in the financial field.
Bitcoin and gold reacted almost immediately after Trump’s announcement on Twitter. The direct consequence of the President testing positive for Covid-19 was a sudden increase in volatility both for cryptocurrencies and gold. Traditionally seen as a safe-haven asset, it’s not surprising that gold suddenly increased in value. Once the news was delivered, gold was up by 0.88% just in the first hour.
As for Bitcoin, the cryptocurrency volatility took a downward path by 1.5% in the hour after Trump’s announcement but holding at $10,400. At the same time, Asian stock markets decreased, and US Treasuries went up the same way gold did. The oil had another fall after struggling for quite a while now. Overall, apart from the established ‘safe-haven’ assets, everything else had an adverse reaction.
Factors that Influence the Crypto Market
The sudden drop in Bitcoin and other assets is to be expected in such a situation. And the fact is Bitcoin was already on a small descending curve following the BitMEX scandal, so it’s hard to tell which of these two events had the main impact. These changes are not surprising because cryptocurrency, in general, usually goes through moderate growth but also sudden adjustments.
So, which are the main factors that influence the crypto market?
- The equilibrium between supply and demand plays an important role; it’s one of the market’s fundamental laws. The Bitcoin price will be higher during the periods when it increases in popularity, and investors are more interested in buying. On the other hand, the price will be lower if the offer exceeds the demand. And that equilibrium can be easily broken by different events, causing investors to react, one way or another.
- Cryptocurrency regulations is another key element
- News on infrastructure also plays an essential part. Every change in infrastructure that makes Bitcoin more accessible affects its price. Crypto ATMs are the perfect example in this respect.
- News on hacker attacks always influences the market downwards, as it would be expected.
- Coin listing, or delisting, is another element that affects the market. Listing usually brings an upward movement, while delisting causes a drop.
- Media news plays a crucial part in the evolution of the crypto market. It may not be apparent if Bitcoin is correlated to gold or equities, but it is a fact that major events featured in the news cause immediate response from the crypto market. And that’s exactly what happened in this case.
Will Bitcoin Continue to Decrease?
It’s still challenging to make provisions regarding Bitcoin’s evolution, precisely because of its volatile nature. As we mentioned before, the current downward curve is also related to the BitMEX owners facing criminal charges. That may be the main reason for the drop Bitcoin has registered. However, such occurrences have happened before as well, without permanent consequences. So even combined with the news of President Trump’s positive Covid-19 test, it’s still unlikely to cause a severe drop for Bitcoin.
What makes Bitcoin different from traditional assets is the fact that its value is the one that people assign to it. With its utterly online presence, the price of Bitcoin is easily influenced by the news but also by discussions on social media platforms. So it’s no wonder that the news that the President of the United States has been infected with the new coronavirus caused a change in the crypto market.
But experts seem to agree that Bitcoin is likely to hold its grounds generally, or if it still decreases, it won’t be for long. On the other hand, many believe that if Bitcoin is strong enough to resist both BitMEX and Trump’s temporary health condition, it will probably remain over $10,000.