The Implications Of The CoronaCrash

What it means for bitcoin, DeFi, and the markets as a whole

Happy Holy Crap, Blockfolians

Sorry about the late hour of this coming out. It’s been a day.

The Lede

Last night, in the span of less than an hour, the threat of Coronavirus went to something that a huge portion of the US population was passively ignoring or actively denying to something absolutely un-ignorable and undeniable.

  • President Trump went on TV and announced that all flights from Europe would be cancelled as well as variety of economic stimulus, including a $50 billion small business aid package

  • Tom Hanks announced that he and his wife Rita Wilson had both tested positive for Covid-19

  • The NBA cancelled its season.

Today, there was a palpable uptick in fear.

Instead of our regular format, today we’re going to look at the implications of this tremendous moment for traditional markets, for bitcoin, for safe havens, for DeFi, and for our broader crypto community.

What Happened In The Markets?

Today was the worst day in the US stock markets since 1987. Down 7% within minutes of opening, there were immediate calls for more action.

Within hours, news broke that there would be significant new injections of liquidity into the markets.

And while the markets initially rose 1400 points, it was quickly followed by a further drop. The day ended at 10% down.

What Happened In Bitcoin?

If you’re reading this, it’s hard to imagine that you haven’t been glued to your screen watching Bitcoin crater from nearly $8000 yesterday to under $5000 as we write this. At the same time, there is some important perspective that’s worth keeping in mind:

What are the implications for ‘safe havens’?

With the price down nearly 40% in 24 hours, the “bitcoin as a safe haven” narrative has taken a beating. Yet at the same time, gold is down at well. What we’re really seeing is a broadening of our understanding of what safe havens really mean in different types of crises.

What are the implications for DeFi?

DeFi is one of the most important emergent areas of crypto. It is built in large part on an over-collateralization model that is designed to withstand even rapid price shocks. Well, that design is being put to the test. This one is still developing.

What happens next?

The short answer is: no one knows.

Yet in the chaos and confusion and not knowing there are at least some signs for hope. 76% of the bitcoin transactions on Coinbase in the last 24 hours are buy orders. Institutions may be fleeing to cash as fast as they can, but the retail hodlers that have always been the base of this market aren’t just staying strong; they’re buying.

It might get worse before it gets better, but we’ve got each other. That’s not nothing.