HEATH MUCHENA | When a cruise ship becomes a market signal

A Dutch couple went birdwatching near a landfill in southern Argentina last month. Weeks later, they were critically ill aboard a cruise ship anchored off the coast of Cape Verde, and the phrase “next Covid” was trending globally.

The hantavirus outbreak aboard the MV Hondius has killed three people, infected eight, and sent former passengers scattering across a dozen countries. However, health authorities have been unequivocal. “This is not the start of a Covid pandemic,” the World Health Organisation’s (WHO) Maria Van Kerkhove said at a press conference last week.

However, markets don’t wait for epidemiologists. The instinct to reach for historical parallels is understandable, if imprecise. Hantavirus has existed for decades. The Andes strain involved in this outbreak is the only one capable of spreading between people, and even then it requires close and prolonged contact.

For all of 2025 eight countries in the Americas recorded only 229 cases in total. The flu kills about 650,000 people every year without generating a single “next Covid” headline.

The financial question worth asking is what a century of actual pandemics tells us about how markets behave when fear arrives, regardless of whether the fear is warranted. The answer is more consistent than most investors realise.

During the Spanish flu, the deadliest pandemic in modern history, the Dow Jones industrial average rose 10.5% in 1918 and surged 30.5% in 1919. The flu killed tens of millions; the stock market barely registered it on an annual basis.

The financial question worth asking is what a century of actual pandemics tells us about how markets behave when fear arrives, regardless of whether the fear is warranted. The answer is more consistent than most investors realise.

During the Sars outbreak in 2002 Hong Kong’s Hang Seng fell about 18% and recovered fully within six months. During the Ebola outbreak of 2014 the S&P 500 dipped about 9% in October before reversing entirely within weeks. In every case, the acute fear phase was followed by a recovery that exceeded the drawdown.

Covid-19 was the extreme version of this pattern. The S&P 500 fell 34% in five weeks, the fastest crash of that magnitude in American stock market history. Then the US Federal Reserve cut rates to zero, expanded its balance sheet by $4-trillion, and the US government deployed more than $5-trillion in fiscal stimulus.

Within five months equities had recovered to prior highs. Bitcoin, which crashed 58% on a single day in March 2020, reached $69,000 by November 2021, a gain of about 1,700% from its panic low in 18 months.

The pattern, repeated across a century of outbreaks, is this: fear drives selling, selling triggers policy, policy floods markets with liquidity, liquidity inflates asset prices well beyond where they started. The worse the perceived threat, the more aggressive the response and the more powerful the eventual recovery.

That dynamic now collides with a crypto market that looks nothing like the one that faced Covid five years ago. BlackRock, the world’s largest asset manager, holds more than 812,000 bitcoin in its spot exchange-traded fund (ETF). Institutional demand absorbed about 19,000 bitcoin in a single nine-day stretch in April, nine times the amount newly mined in that period. Cumulative inflows to US bitcoin ETFs since their January 2024 launch have crossed $58bn.

Meanwhile, the US Federal Reserve is navigating the most divided rate-setting committee since 1992, with inflation above target at 3.3% and a leadership transition as Jerome Powell’s term expires this month. The policy path is genuinely uncertain. But if history is any guide a sustained economic shock triggers accommodation, and accommodation is the primary ingredient in every crypto bull market on record.

None of this means hantavirus is a buying signal. The WHO is likely right. The outbreak will almost certainly remain contained. What it does mean is that markets have a well-established mechanism for pricing pandemic fear, and a crypto ecosystem with institutional infrastructure sophisticated enough to absorb, and amplify, any liquidity response that follows.

Investors who sold bitcoin at $4,000 in March 2020 watched it reach $69,000 19 months later. The lesson wasn’t about virology. It was about recognising when fear creates the conditions that historically precede the opposite of what fear predicts.

• Muchena is founder of Proudly Associated.