Bitcoin and Crypto Spending Down Thanks To Coronavirus Pandemic

Blockchain surveillance firm Chainalysis is reporting that the Bitcoin and crypto economy is suffering amid the global coronavirus pandemic. While popular opinion might suggest that with governments all around the world printing money out of thin air to bail out big corporations and the everyday business man might help the price and the use case of Bitcoin and other digital currencies, research is revealing the contrary.

The details of the study highlight changes in crypto spending habits showing that people are clearly willing to be much more conservative with all of their assets, not just traditional investments.

Studying Three Main Pillars of Crypto Spending During A Pandemic

While there are many different industries and types of businesses around the world that except Bitcoin as payment, the report gets specific with regard to evaluating spending activities occurring through Bitcoin-friendly merchant services, gambling sites, and e-commerce markets doing business on the dark web.

The report revealed that all three types of spending are dropping significantly and that this drop is ongoing dating back to March 9. That means that at the time of this writing, the crypto economy is already five weeks into its own economic or use case downturn if you will.

Note however that a variety of trends are exposing themselves within each category.

Dark Web Sensitive to Bitcoin Price

As much as the dark web is often an outlet for unscrupulous businesses to make money and except value using Bitcoin, that doesn’t mean that users engaging in these kind of markets are inclined to spend money regardless of what Bitcoin’s price is.

The report shows that the darknet as a whole sees steep declines in revenue whenever the price of Bitcoin plummets. This is surprising to note given that one would think criminals would be in a hurry to get rid of illicit products and services regardless of the price. It’s clear that they are actually willing to HODL those offerings until they can get better value for their efforts.

Dropping Bitcoin Price Doesn’t Affect Gambling

Notice the report specifically mentions that the Bitcoin price does not deter people from gambling directly. While blockchain analytics can prove this as the report shows, the broader economy still affects the decision-making of the average gambler.

Both today and back in 2008 during the global economic crisis, the share prices of traditional brick-and-mortar casinos plummeted. On a mass scale, gamblers tend to hold onto their bankrolls. The psychology of that makes sense because somebody going to a casino actually has to leave the house and watch the money leave their hands.

The reason why this doesn’t affect Bitcoin gambling is much is because people are in self isolation. It can also be said that perhaps Bitcoiners are more likely holding onto crypto as the price plummets might be less worried psychologically to go in place a wager with an amount of crypto that is worth significantly less than it was a month ago. Assuming that the average Bitcoin investor has a higher risk tolerance than someone that chooses traditional investment instruments, it’s logical to assume that somebody that invests in Bitcoin is more likely to gamble with it at the worst of times than a traditional investor is to go to brick-and-mortar casino to wager with fiat currency.

The numbers in the report prove that to be true.

How Bitcoin’s Price and COVID Affect Crypto Spending Overall

As much as the Bitcoin purist sees digital currencies as the antidote to government control and the eventual collapse of the traditional global economy, the reality is the trust in Bitcoin just isn’t where it needs to be quite yet. Due to the speculative nature of the investment, even nine years into the existence of blockchains, it appears the average crypto holder is still inclined to pull out of the market when the broader global economy is struggling.

Although the source of this current economic downturn is a wildly spreading disease and 2008’s collapse happened because of unscrupulous activity on the part of central banks, the reality is both collapses are advancing the adoption of Bitcoin and the like, even if this most recent report might suggest a decreased desire to spend it at the moment.

Jack Choros

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