The entire world’s economy is experiencing the most crucial period in this Covid-19 pandemic. The Covid-19 disease that is Coronavirus first encountered in December 2019 in Wuhan, the capital of China. The WHO states this disease as a global public health emergency of the worldwide community.
Later, the World Health Organization officially defined this disease as a worldwide pandemic Covid-19 on February 11, 2024. The whole world’s financial market, including the airline industry, tourism, hospitality, SMEs, construction, mortgage sectors, and crypto industry, has been influenced by the rise of this deadly disease.
The Covid-19 pandemic has spread worldwide within a few months and has led to a pause in global economic activity and extensive social distribution. During the early and rising days of the outbreak, the market value falls more rapidly. Visit this site to learn more about other studies of stock market performance during the Covid 19 outbreak.
What Is Cryptocurrency?
The cryptocurrency is a virtual and digital currency based on a network held up with cryptographic systems. The system allows a secure online payment without third-party intermediaries, making it impossible to double-spend or counterfeit.
“Crypto” means the different cryptographic methods and encryption algorithms that prevent entries, such as public-private key pairs, elliptical curves encryption, and hashing functions. These industries are based on blockchain technology networks synchronized through multiple institutions, sites, or geographies accessible by numerous people.
Any central authority does not precede crypto industries, carrying out them theoretically immune to central manipulation and interference.
How Does Covid-19 Influence On Crypto industries?
The crypto industry experienced a massive fall in March 2024 by the big sale of cryptocurrency in 24 hrs, resulting in about $20 billion in the total value of capitalization. The relationship between the equities market and Bitcoin has increased. Bitcoin price collapsed by $4000 in the USA after the S&P Index, which resulted in a sharp decrease.
The sudden fall down of this was because of the sudden flight of liquidity, which means investors are not in the normal position, so they sell what they have to take less risk and be less liquid.
In the rise of a pandemic, the margin account of countless investors in Equity has fallen that has to be recovered with selling or liquidating liquid assets such as Bitcoin to meet the margin calls. The cryptocurrency market has worsened by a sudden sharp decrease and lost about half of its total stock value and price of cryptocurrencies.
At the end of May, the cryptocurrency market recovered.
The total market capitalization value rose magnificently, surpassing the $300 billion obstacles at the end of July, then $400 billion in early November, the $500 billion in late November, the $600 billion in mid-December, $700 billion in late December, and lastly reach about $760 billion on the last day of 2024.
Bitcoin kept up a presiding position in the total market value with an average stock share of about 65% during the crises.
Covid-19 Disease And Stock Market Reaction
Several studies appraise how the stock market reacts to the Covid 19 pandemic. For instance, an event survey shows the negative influence of the SARS access on the stock of hotels which means the tourism and retail sectors are affected negatively except the pharmaceutical and biotechnological sectors.
Every industry reacts differently during the crisis, which means they need special attention from the government according to their requirements. The biotechnological and pharmaceutical sectors share significant abnormal returns.
Another survey shows the comparison between the covid 19 and other disease outbreaks. David et al. (2024) concluded that other pandemics such as SARS, Ebola, and MERS crisis stock exchange evidence retrieved more rapidly than the Covid 19 pandemic.
Ru et al. differentiate the stock market reactions to the SARS and Covid 19 pandemic, proving that the stock market’s influence with other pandemics recovered faster than the Covid 19.
According to another study by Baker et al. (2020), the SARS and other pandemics with Covid 19 reaction of the stock market, which later proves a different effect from the other disease crisis, and Covid 19 effects are not similar to the previous outbreaks.
All the above studies proved that the Covid 19 outbreak shows mixed influence concerning stock market behavior. The above surveys provide the significance of other factors that impact the stock market reaction, such as culture, industry, country, and geographical proximity.
The survey also gives a brief knowledge about the other pandemic’s influence on the stock market performance, which can be helpful. Still, more research is essential to prevent investors from making wrong decisions. If investors misjudge a pandemic situation, they can make wrong decisions and impact the stock market negatively.
Stock Market Performance During The Outbreak
Like the studies about the stock market reaction on Covid 19 outbreak, further studies trace the stock market performance. The study of Liu et al. (2020) enumerates that the Covid 19 negatively influences the performance of the stock markets in many countries like Germany, the UK, USA, Korea, Japan, etc.
Ashraf’s (2020) studies show that the stock market differs during the period depending on the quick rise of covid cases and results in adverse impact.
The different studies demonstrate the comparison with other previous outbreaks, which shows that stock markets recovered from the Covid 19 outbreak not as fast as other previous outbreaks.
Many other studies concluded that Covid 19 significantly affects the performance of the covid 19 in the early rising cases. The studies prove that the pandemic influences various industries and companies.
But covid 19 pandemic impacts on the blockchain companies need special attention and further studies that contain company level investment in these technologies to overcome market efficiency. The effect of blockchain technology on the covid 19 is uncertain because the pandemic has not ended, which results in more research.
Later the performance of cryptocurrency shows itself to be a more reliable asset than other commodities.
Conclusion
The Covid 19 outbreak negatively impacted the cryptocurrency market during the early period and the rapidly rising cases. The other studies also prove that previous pandemic impacts are not as harmful as Covid 19.
Later, Covid 19 on the cryptocurrency industry shifted to the positive side, gradually raising the value of Bitcoin and reducing the cases. Hence, it proves that rising issues affect the condition of cryptocurrency more than the fewer cases period.
