China quarantines banknotes for disinfection due to fear of pandemic Coronavirus, a great opportunity for Bitcoin?

By Selena On Feb 17, 2020

The Chinese government has decided to extensively recover and isolate paper notes to prevent the spread of the coronavirus COVID-19. Meanwhile, the cryptocurrency community quickly expressed their delight at the news, arguing that Bitcoin as a means of payment would thoroughly solve this problem.

China “quarantined” even paper money

The Central Bank of China (PBoC) said it had taken several measures to reduce the rate of spread of COVID-19 – the formal name of the coronavirus strain raging in the country. Specifically, the PBoC required commercial banks to recover used banknotes and disinfect them.

The subsequent disinfected paper money will be stored and quarantined for a period of 7 to 14 days before being returned to use, with the length of isolation time depending on the situation in each locality. Phuong. Meanwhile, the central bank branch in Guangzhou announced it would destroy all cash recovered from hospitals, markets, and public bus systems as soon as possible. According to some sources, the authorities have begun focusing capital on the warehouses to wait for the date of destruction.

Besides, the Deputy Governor of the PBoC announced that it had instructed commercial banks to provide new paper money instead of used money to people if possible. Earlier, the central bank also “urgently issued” 4 billion yuan to promptly move to the area most affected by the COVID-19 epidemic in Hubei province just before the Lunar New Year. These steps are intended to “protect the safety and health of people when using cash,” Mr. Fan said.

Impact on the cryptocurrency market

Reports suggest that many mining farms in China have been forced to close because the coronavirus seems not to affect the hashrate of the Bitcoin network. The mining power of the world’s number one cryptocurrency is stronger than ever and is expected to continue to grow as Halving gets closer and closer.

A famous analyst, Mati Greenspan, said it was difficult to assess the impact of COVID-19 on the cryptocurrency market at this time.

Greenspan said:

“I have no idea how this will affect the price of Bitcoin. But for the moment, I don’t see any impact.”

The starting point for the “death” of banknotes and the value of Bitcoin?

The move to revoke and isolate banknotes to prevent viruses could have a lasting impact on cash use rates in the country of billions of people. China has long been known as a leader in mobile payments, with industry giants like Alipay and WeChat providing solutions that allow users to shop anywhere and pay on their phones. Voice by scanning the QR code.

Outside of China, this outbreak will give governments more countries to call on people to turn to digital payments, one step more to form a “non-social” society. The government will have an excuse to issue a ban on the use of banknotes for “protecting public health” besides the original purpose of increasing supervision on the economic life of the people.

#Bitcoin fixes this. pic.twitter.com/zlIabnVdkg

— Lina Seiche (@LinaSeiche) February 16, 2020

However, this is also an opportunity for the decentralized payment of cryptocurrencies to stand up. Indeed, given the news that China ordered the withdrawal of paper money to quarantine, many in the cryptocurrency community quickly called it a limitation of paper money that Bitcoin could soon overcome.

In another development, according to a Reddit post, an ERC-20 token called Corona Coin (NCOV) has just been released, to increase the awareness of the COVID-19 pandemic.

CoronaCoin (NCOV) – The coronavirus-backed ERC-20 token from r/ethtrader

But is Bitcoin still valid if the Fed cuts interest rates?

Federal Reserve Chairman Jerome Powell is likely to cut interest rates by 45% again before June 2019. And this could affect Bitcoin. The rate cut will work and boost the economy.

Jerome Powell, Federal Reserve Chairman

Interest rates are an essential tool for managing economic growth. Lower interest rates make borrowing cheaper, allowing greater liquidity to enter the market. Increasing interest rates slow down borrowing because of higher costs, and thus limits liquidity in the market. When liquidity decreases, the economy tends to slow down, that’s when we can see the change of Bitcoin.

However, while the economy has been in a difficult situation for some time, the Fed has noticed worries. For example, the increase in unemployment claims this year shows weakness in job growth. Besides, coronavirus has created widespread fear and tightening spending.

First, this news may surprise many people who are on new all-time highs for stocks. S&P500 stock price rose 4.6% in February – the best level since 2015.

These events have led to a fear that the economy could contract. To maintain current growth and stability, a reduction in interest rates can be made.

Regardless of how current liquidity issues are viewed, such a rate cut could cause Bitcoin to rise in value. The interest rate cut will indicate economic weakness. Because Bitcoin is considered a safe-haven asset, it may benefit from weakness in the economy as a whole.

Moreover, cutting interest rates and increasing liquidity also means expanding inflation. Bitcoin has been regarded as an anti-inflation barrier and can, therefore, receive significant appreciation if the cut occurs.

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