The COVID-19 pandemic has affected and will continue to affect nearly everyone on the planet. For many, checking the latest COVID-19 numbers has become as habitual as that morning cup of coffee. So has the torrent of new crown information covering everyone also affected the price of Bitcoin?
Using global COVID-19 cases and deaths data from Our World in Data, daily Bitcoin price and volume data from Crypto Data Download, and daily web activity data from CoinMetrics, we analyzed the peel between COVID-19 data and Bitcoin price poor correlation coefficient. Of course, we understand that correlation does not prove causation. We also discuss this issue below. The Pearson correlation coefficient measures how closely related changes in two values are over time. A score of 1 indicates a perfect positive correlation (both variables rise or fall in tandem), and a score of -1 indicates a perfect negative correlation (when one rises, the other falls). Unsurprisingly, the two most correlated values in our analysis were the number of new confirmed COVID-19 cases and new deaths worldwide, with a score of 0.87, a very strong positive correlation. But there is also a very strong correlation between the price of Bitcoin and the number of new cases (0.8) and new deaths (0.76). Trading volume (at least on the Gemini exchange) doesn't correlate much with cases (0.08) or deaths (0.15). There is a strong correlation between the number of daily active addresses and the number of daily new cases (0.78) and deaths (0.77). In fact, the number of Bitcoin active addresses has a stronger correlation (0.66) with the number of confirmed cases and deaths than with the price of BTC! Except for a moderate correlation (0.56) with the number of active addresses, there is no strong correlation between daily trading volume and other data. So what does all this mean? As we mentioned earlier, just because some of these values are correlated doesn't mean they actually influence each other. The correlation could be a coincidence. And in less than a year of data, coincidences are certainly possible. There are also factors that make it more likely that these correlations are just a coincidence, such as trading activity and the number of new crown cases both tend to fall over the weekend. This increases the correlation score, but it may just be that many people (including the labs responsible for the new crown testing and crypto traders) often have weekends off. However, it is also possible that this relationship is real, with investors looking to use Bitcoin to store some of their assets during a time of unprecedented global uncertainty. Several academic studies have shown that the price of Bitcoin is affected by political and economic uncertainty, although the correlation is not always positive. The confirmed cases of the new crown and the price of Bitcoin do seem to have risen sharply at almost the same time. In 2021, the five days with the highest single-day increase in the number of confirmed cases of the new crown are: January 6, January 7, January 8, January 9, and January 15. What about Bitcoin? They are January 6th, January 7th, January 8th, January 9th, and January 14th. While the charts give the impression that January's surge was the only relevant moment for prices, the data paints a different story. Even if we remove all the data for 2021 and only look at the data for 2020, the price of Bitcoin is still closely related to the number of new crown cases per day (0.85). Compared with the price of Bitcoin (0.62), the number of active Bitcoin addresses is more closely correlated with the number of new crown diagnoses (0.72). In other words, nothing changes. , Use data to understand the blockchain. LongHash, Use data to understand the blockchain.
