COVID-19’s Impact on Ethereum Trading

Undoubtedly, China is one of the biggest countries in the world that is considered an important player in the cryptocurrency investment sector. Also, the country has been involved in various cryptocurrency tradings ever since cryptocurrency became popular. On the contrary, China also became the epicenter of COVID-19 earlier in 2020. That said, COVID-19 has made negative impacts on China’s economic status. With COVID-19’s presence, many businesses worldwide have been greatly impacted. Both traditional and cryptocurrency markets have felt the havoc. As a result, many traders and investors rushed to liquidate their assets, including Ethereum.

The news about COVID-19’s spread across many countries worldwide made the Asian and European stock markets decline dramatically. Without a doubt, cryptocurrencies, such as Ethereum, have a challenging time during this phase. Cryptocurrency prices have retraced slightly; however, they are moving sideways on the chart. Hence, the trend implies that cryptocurrency markets are struggling to recover during COVID-19.

In this guide, we highlight everything you need to know about Ethereum’s performance since the start of the global pandemic until present times.

Is Ethereum Trading Still Safe?

Cryptocurrency traders are wondering if trading popular cryptocurrencies, such as Ethereum, is stable and safe. According to research, cryptocurrency trading, just like any other global business, isn’t safe during the pandemic. It’s a natural human instinct to protect their money, wealth, and other possessions. That said, during the pandemic with a ravaged global economy, no cryptocurrency traders will take the risk of trading when the chance to recover after the wreckage is uncertain.

With prolonged quarantine and lockdowns, everyone is 100% aware of the possible impacts of COVID on the economic status of a country. Worst case scenario, some countries cannot recover easily after the pandemic.

On the contrary, decentralized mechanisms advocate various forms of cryptocurrencies. In the 21st century, crypto is already being utilized by many people worldwide. Aside from that, cryptocurrencies are independent of the government. On a more positive note, COVID-19 made individuals change traditional currencies to cryptocurrencies. Hence, there’s a glimmer of hope that Ethereum trading will continue to become a major player in the world of cryptocurrency trading in the foreseeable future.

Ethereum Trading During COVID-19

Considered as the 2nd most popular cryptocurrency, Ethereum has been badly affected by the recent pandemic. Specifically, the 2nd most traded cryptocurrency in the market declined to a massive 61.24% from February 2020, resulting in more than US$285 as of March 2020.

With Ether wales, they have held more than 30% of all Ethereum accounts compared to Bitcoin’s 20% only. As COVID-19 triggered panic selling to accumulate steam, Ether wales have been considered as a major cryptocurrency player. According to Chainalysis Insights’ cryptocurrency data study, Ether whales are to blame for the latest devaluation. 

Another cryptocurrency data analysis organization – Santiment, had posted last March 2020 that the Top 100 Ethereum account holders i.e. the Ethereum whales had accumulated more Ethereum for long-term investments. As a result, the incident was considered a sign of positive outcomes.

However, a week after they’ve posted their findings, there has been a turnaround of events. They concluded that the same group of Ethereum whales eventually dumped their Ethereum assets in March 2020. In addition, the massive cryptocurrency downfall also occurred in the same time frame.

Although the Ethereum whales were pressured to sell their assets to cover losses, the incident significantly implies that they had a crucial role in Ethereum’s biggest downfall yet. With Chainanalysis experts’ further research, they also state that the Ethereum whales control a lot in Ethereum trading and can result in intraday volatility. Despite these findings, Ethereum whales don’t affect overall prices during trading.

Also, Ethereum trading value had a significant decline of 39.9% or under US$113 from earlier in 2020.

Ethereum’s Hashrate Performance

As an overview, hash rates denote the Ethereum miners’ speed. Specifically, it is the number of hashes guessed per second for cracking the cryptographic nonce of a block per transaction. In March 2020, Ethereum mainnet’s hash rate remained consistent at ~170 harsh rates per second during the most volatile period. During the 2nd week of the same month, the daily hashing average power was approximately ~165TH/s. Unlike Bitcoin’s hash rate, Ethereum’s hash rate remained consistent. On the contrary, Bitcoin had a 20% decline in mining hash rate. In conclusion, the majority of Ethereum miners remained on the network during the volatility of prices.

Ethereum vs. Traditional Assets

In March 2020, the stock market’s performance had remarkably proved that traditional assets and cryptocurrencies are interconnected. It was verified through CoinMetric’s data indicating the bump of prices and the price correlation between Ethereum, Bitcoin, and S&P500.

For many financial experts and investors, cryptocurrency trading is still an excellent investment option in a diverse portfolio. Aside from that, it isn’t a 100% adopted hedge against the lack of transparency and instability in traditional markets.

If there was a supreme insight from the market decline in March 2020, it is that transparency and data availability are crucial to the triumph of global finance, and decentralized finance. In 2008, the cryptocurrency ecosystem boomed as an immediate response to the lack of transparency around launderings, zombie banks, and toxic assets. Hence, the disorientation of global market assets is evident. During COVID-19, the transparency of the Ethereum network and Ethereum trading has helped in the market’s search for the safest asset in the world.

According to many FinTech experts, a new system of beliefs regarding stability, transparency, and trust in the financial aspects is gained out of the recent health crisis.

Summary

While COVID-19 cases around the world continue to increase, no one has ever predicted or gathered enough data to evaluate the possible outcomes between Ethereum trading and other major players in the cryptocurrency market after the pandemic. Also, no one really knows how and when things will revert to normal. 

Take note that the coronavirus doesn’t only impact Ethereum, but it also wreaks havoc on other major cryptocurrencies, such as Bitcoin, Bitcoin Cash, and XRP. In a nutshell, COVID-19 is by far the only factor that has negatively affected the cryptocurrency market in the 21st century.