Bitcoin Is A Leading Indicator Of The Coronavirus Outbreak – Forbes

The number of cases of coronavirus has risen to more than 2,700 in mainland China. Photo by Betsy ... [+] Joles

I have maintained for a long time now that China is a very significant driver of bitcoin (BTC). I have also maintained that bitcoin is a leading indicator of troubles in China because it is a safe haven asset and flight capital.

I have repeated the assertion that you cant easily 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 is 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 person 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 your 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 bitcoin because once you have those crypto wallet keys the money is anywhere you want it. You might also buy it as a hedge against the worst.

The coronavirus outbreaks started in early December, so lets take a look at bitcoin:

Bitcoin's movement since the Coronavirus outbreak in Decwember

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 cannot predict the future, only the current situation.

This is what we are looking for in the Bitcoin chart

With the media screaming plague at the top of its toxic voice, the stock market could well take a tumble, but unless BTC shoots above $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 Im 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 the 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 thats 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 ten days.

As such, Im going to be watching the bitcoin price like a hawk.

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Clem Chambers is the CEO of private investors websiteADVFN.com and author of 101 Ways to Pick Stock Market Winners and Trading Cryptocurrencies: A Beginners Guide.

Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards in 2018.

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Bitcoin Is A Leading Indicator Of The Coronavirus Outbreak - Forbes