This is a March 2020 Cointelegraph Report (YouTube) examining how the early COVID-19 outbreak and lockdowns in China affected daily life, business activity, financial markets, and the crypto industry. The video cites WHO figures (≈88,000 infections, ≈3,000 deaths, 99% in China), describes severe local lockdowns and social anxiety, and documents business disruptions (retail, travel, events, conferences). It highlights crypto-specific points: China's CBDC development faces a 3–6 month delay as resources shift to containment; ~66% of Bitcoin mining power is located in China but hash rate remained steady; cash was being avoided, prompting conversions into stablecoins (USDT, DAI). Financial markets fell sharply (Shanghai Composite plunged 8% on Feb 3) and the PBOC injected about $22 billion; despite these shocks, cryptocurrencies dropped (over 10% in a sell-off) and did not function as a clear safe haven in this episode.
Questions this video answers
About 88,000 infected and around 3,000 deaths.
About 66%.
Approximately 3 to 6 months.
It plunged 8% on February 3rd.
About $22 billion worth of yuan.
Chapters
When was the last time you went outside?
Well, three days ago, I took a small walk in the. In the park? Yeah. Otherwise you have mental problems. Just put yourself in jail, in a hole.
Official reports from the World Health organization reveal over 88,000 people have already been infected in 64 different countries. Around 3,000 deaths have been confirmed. 99% of these infections and deaths have occurred within China. Beginning in late January, lockdowns and restrictions were implemented in major cities throughout the mainland, including Beijing, Shanghai, and the entire Hubei Province.
It's really quiet, actually. So much less traffic. I live right in the center of the city, so from my apartment, I can see traffic getting really, really bad every day. But now you barely see any cars or people. They're really just trying their best to isolate themselves so that this very thing is gonna get better in the future.
I'd say people are very, very anxious. People are very nervous. I saw a video of somebody going out in an inflated full body costume of a Christmas tree because they thought that was the best way to, you know, prevent them from getting the viruses is wear a full body suit. They don't have a hazmat suit, so they're wearing a costume and you can laugh a little bit. And then you realize that there's somebody who's going outside in a Christmas tree suit in the middle of February because they're that worried about getting sick. And it's an immense psychological pressure on people.
That pressure is affecting everything in China. Personal lives, all levels of business, and even the highest government priorities. But what impact is the virus having on the Chinese crypto industry? Can crypto provide a measure of safety in these turbulent times? To understand this, let's first take a look at how traditional business in China is being affected.
I'd say a lot of the smaller business is going to be facing this great challenge, and especially for meals and entertainment industry, because no one's really out for gathering and eating out. So I think those industries will be affected the most.
It's not only small businesses that are being affected. Airbnb has suspended all operations in Beijing until March. McDonald's, KFC, Starbucks, and Ikea are all temporarily closing down thousands of locations throughout the mainland. Is this fear also having negative effects on the crypto industry in China?
It will affect the cryptocurrency industry less, the blockchain industry less than some other industries. For example, anything that's retail or travel is another good example. You know, Cathay Pacific, one of the big airlines in Hong Kong, has asked their employees to take three weeks of unpaid leave, everybody, 27,000 people, because they've got nobody on flights right now, nobody is traveling. And so at least we can continue working. You know, the Internet's online always.
As we see reports of the Chinese government quarantining the use of cash, it gives even more of a use case for the application of blockchain based digital currencies. One of China's main goals in 2020 is to release its long awaited central bank digital currency. However, the emergence of the coronavirus is drawing the Chinese government's energy away from developing this new technology.
Most of the resources on the budget has been spent on containing the virus. I look to have a three to three months to a half year delay than the original plan.
There is even some worry that bitcoin, the world's most well known digital currency, could face some challenges from the virus. In early February, the Chinese government forced a bitcoin farm to shut down. About 66% of Bitcoin's mining power is located in China. If a large number of bitcoin mining farms are forced to shut down, it could compromise the security of the bitcoin network. Despite these threats to the Chinese bitcoin mining industry, Bitcoin's hash rate has remained steady since the appearance of the coronavirus.
I have a lot of people, a lot of friends asking me what's going on with China? Are we still going to have bitcoin? They're worried about mining pools, they're worried about mining in Sichuan province and other places in China. And I have to tell them that's not going to be affected. Those are going to stay online.
Why is it that mining farms are able to remain relatively unaffected by the virus?
I don't think it's a big risk for the mining farms because mining farm doesn't take a lot of employment. I think most of those private mining farms still continue to work and they don't hire a lot of people.
That's not something that requires a lot of face to face contact in order to be managed.
Even though bitcoin, blockchain and crypto exist almost entirely on the Internet, human work is still needed to maintain these networks. Yet it is the daily lives of the people that are being most affected by the coronavirus.
We're having to work with clients in a totally new way. People don't want to meet face to face. And when you do business in China, it's very important that you can meet face to face. You can build up a relationship with.
People, especially for business development. When you try to see People you're not familiar with for the first time. Definitely a face to face meeting will be much better, right?
Networking and relationship building are crucial parts of all business development. With people unwilling to meet face to face. Crypto events and conferences that are usually key for facilitating the flow of business and ideas are being severely affected. Nitro 2020 in Seoul, Hong Kong. Blockchain Week 2020 and Token 2049 have all been postponed. Crypto lending startup Definer was forced to cancel a 10 city tour across mainland China. But it's not only external business relations that are being impacted here. The virus is also putting relationships within companies on edge.
We are worried, very worried about our employees health especially, you know, I'm on the management role. I have to make sure none of them get infected. It's not just because I care of them. Also I. It's also because if any one of them are infected, probably the whole company will be quarantined. And also the management will have to take some responsibility for that.
The people in China are worried and nervous. Business culture is being forced to change. Cash is being quarantined. And the Chinese stock market has suffered heavily. The Shanghai Composite Index plunged 8% on February 3rd. This was the worst single day drop in nearly five years. However, the People's bank of China has since pumped over $22 billion worth of yuan into the economy in order to stabilize the stock market. Is this financial fear also having negative effects on the crypto economy in China?
The Chinese government doesn't allow the stock market in China to decrease or increase a certain amount. They have like a cap on the size of the movie it can make each day. And the first day that the market was open, that people came back from holiday within minutes, it went as low as it could go in a single day.
On February 28, the Chinese stock market suffered another large tumble. But this time the fall was mirrored in other major stock markets around the globe.
So we've already seen that the coronavirus is taking a toll on economic activity. We see it every day in terms of video, empty streets, empty stores, factories that are effectively shuttered. China is incredibly important in terms of the strength of the world economy. But what's different with this is it's not just a local economic shock in China. It is a shock that's going to be felt throughout the world. And we're seeing other countries like Italy, Korea, Japan, all taking a hit as a result of this. So the same problem that's happening in China, other countries are exposed to, we focus on this type of Risk. And this is the type of risk that leads to decreased economic activity.
Is there a safe place to weather this financial and biological crisis? What about crypto?
People expect the RMB will depreciate because the economy will slow down. A lot of people actually convert their savings to cryptos, convert their saving to USDT or dai.
I mean, I can't blame people who are looking for safe places to store value. China is connected to the entire world, not just through cryptocurrency or blockchain, but in almost every single industry. And it makes a lot of sense for people to say, look, with such a big negative effect on China right now and potentially the global economy, I need to find a safe place to store value. And Bitcoin makes a lot of sense for that.
Despite lacking an inherent connection to traditional finance, Bitcoin doesn't appear to be functioning as the safe haven it should be.
We saw a major sell off in the stock market where the prices on consecutive days went down 3%. That is a, a substantial move in the stock market. Now if these cryptos were safe havens, then you would expect maybe no change in their value or maybe even an increase in the value. But that's definitely not what we've seen. The cryptos got battered and dropped by more than 10%. So that suggests to me, in a particular situation of great stress where people are realizing that there's systemic risk unfolding, the stock market drops as expected, people flee to safe assets. But they didn't flee to cryptos. They fled to the US 10 year bond.
A lot of talk within China is about the instability. When will things go back to normal? If things don't go back to normal, what is the new normal? And through the thread, through all of those types of conversations are, is Bitcoin a safe place to store value? And a lot of people are paying attention to that.
Often when the stock market goes up or down, we don't really know why. But in this particular situation, we know why. Anytime you've got a big move in the market, that is the lens that you need to try to figure out what happens to other asset prices. And interestingly, it turns out that the cryptos were not a safe haven. In this latest episode, the impact of.
The coronavirus is not only global, it is also digital. People are being quarantined in their own homes. Travel is restricted. Business has been forced to adapt. These limitations inhibited the growth of the Chinese economy. And the negative impact of this setback reverberated throughout the globe. The rise in international fear led to significant drops in many major stock markets, including the U.S. italy, Korea and Japan. Thus emerged a perfect opportunity for blockchain based digital money with no intrinsic ties to traditional finance to prove its worth. Yet in this instance, it seems crypto failed to establish itself as a financial safe haven.
