I have maintained for a long time now that China is a very significant driver of Bitcoin. I have also maintained that Bitcoin is a leading indicator of troubles in China because Bitcoin is a ‘safe haven asset’ and ‘flight capital.’
I have repeated the assertion that you can fly out of a country with cash or Gold and for countries with capital controls BTC is the only way to get out of town with significant amounts of capital.
Like it or not the ‘people’ are never the first to know when trouble is brewing. That the whole reason ‘insider information’ is illegal to act upon. The first to know in these emergency situations are the first to act.
So if you were a rich Chinese and you heard about this outbreak, what would you do? You would certainly consider packing the family off for a bit of a holiday. You might stick around to look after the business, but you would definitely get you loved ones out. You see this in the Riviera. The Russian oligarchs keep their families safe in France while they ply their trade in Moscow. Who would not do the same in that situation?
However you have to fund a long stay abroad and the best way to go, unless you are very well prepared is to grab some BTC because once you have those Crypto wallet keys the moneys anywhere you want it. You might also buy it as a hedge against the worst.
The Coronavirus outbreaks starts in early December, so lets take a look at Bitcoin.
Remember we are not looking to the future we are looking to the past, a past where things are happening before we know about them. Bitcoins recent rally aligns with the assumption that Chinese demand for Bitcoin because of Coronavirus has driven the price.
However what are we looking for? We are looking for an early signal that things are going to blow over or get worse and I believe you can look at Bitcoin for that ‘temperature.’ As such the chart suggests the situation is stabilizing, but of course it can not predict the future only the current situation.
With the media screaming ‘plague’ at the top of its toxic voice, the stock market could well take a tumble but unless BTC shoots over $10,000 and heads for the moon I will be holding and looking to buy.
I wrote a fiction novel about global plague called ‘The First Horseman’ so I’m pre-sensitized to think the worse, but people on the ground will know what is really going on and will react like rational economic actors, if they think the game is up the word will spread far faster than the infection and BTC is instrument that will react sharply and send up the ‘SELL’ flare and have me pulling up my drawbridge.
I think we are going to get a buying opportunity in the market not a global catastrophe but that’s simply a barely informed guess. Instead I believe Bitcoin will provide early warning of good or bad news and we will have a reasonably clear picture one way or the other within 10 days.
As such Im going to be watching the BTC price like a hawk.