Traders of cryptocurrency are dealing with a market that is even more volatile than usual now that the world is coping with the effects of the coronavirus. New global cases of the virus since February 25 have outpaced cases in China according to reports by the World Health Organization.
The fear of a coming pandemic that may cripple the global economy has caused markets across the financial sector to suffer. The S&P 500 Index is down a full 10 percent since the beginning of 2020.
Bitcoin is presently trading for below $9,000 for the first time in over a month. However, the cryptocurrencies year to date value shows a present increase of 20 percent.
The trading volume for over the counter cryptocurrency trades has seen a dramatic increase since the global media first began publicizing the epidemic.
Michael Leon is a trader working for Althena Trading Services in Atlanta. Leon says he has definitely observed an uptick in trades by OTC clients over the last two months. Leon says the action at cryptocurrency exchanges like Coinbase and Kraken has also increased.
According to fxstreet.com, the effect of the virus on crypto markets across the globe has varied. Australia is geographically close to Asia but according to at least one trading desk in the country, there has been no significant slow down in crypto trades for the country.
The OTC desk at Althena has taken a route similar to other traders by choosing not to hold on to cryptocurrency assets any longer than is needed. This strategy protects traders from the current unpredictability of the markets. Leon says the coronavirus has not been an issue at Althena because the desk has been ‘tight’ with its crypto inventory.
Rupert Douglas is the head of institutional sales and business development at Koine. Douglass says the present market uncertainty facing trading desks makes it a necessity to manage inventory.
Douglas explains that alternative assets like Bitcoin and gold have fared relatively well for the calendar year but not over the last few days. He says that huge swings in both directions are possible and probably should be expected in these markets.
The head of trading at ItBit/Paxos, Paul Ciavardini, opines the recent drop in bitcoin value may be a result of spillover from traditional markets. Ciavardini theorizes that traditional institutions with a side hand in crypto are reacting to the threat they perceive from these investments.
