The Impact of COVID-19 on Bitcoin Trading Activity: A Preliminary Assessment

Abstract

A preliminary examination of Bitcoin’s trading activity around the time of COVID-19, Oct9ober 2019 to March 2020 finds that in the first five months of that period, both transaction levels and Bitcoins traded are heavily influenced by the day’s opening Bitcoin price. That relationship begins to diverge in March 2020. With recent research finding a high correlation between changes in the Bitcoin price and the impact on the stock market of COVID-19, it would appear that Bitcoin is not behaving independent of market conditions as expected, but has become inexorably linked to the stock market, which in turn has experienced the impact of government controls on businesses and individuals. It will be interesting to see if Bitcoin regains its independence in the months ahead or has it lost its reason for existence.

Keywords: Bitcoin, COVID-19, Coronavirus, Trading Activity, US Dollar, UK Pound, Yen, Euro, Australian Dollar

JEL Classification: F60, F62, G10, G01, G15