Over these past few months, a highly contagious virus, the novel Coronavirus, has held the entire world hostage and triggered a global pandemic. While the loss of life has been the most colossal casualty, COVID-19 has also left a damaging dent in the world economy.
From manufacturing units to IT industries, travel to entertainment, just about every conceivable industry vertical has been on a standstill since March. Naturally, the ripples of this economic upheaval were felt in the crypto markets too. Let’s take a look at how cryptocurrencies have reacted to this unfolding pandemic and what the future holds for miners and investors:
The Initial Spell of Volatilities
With oil prices falling, stocks plummeting and economies on hold, the crypto market also saw its most volatile phase in March and April. For instance, Bitcoin – the most significant cryptocurrency of the present times – crashed below the $4,000 mark on March 12 after posting a considerable bullish run at the beginning of 2020.
This sharp drop was triggered by a growing need for liquidity following the dip in the S&P Index in the US. The cryptocurrency has since recovered, reaching $7,500 on April 23, and subsequently, breaching the $8,000-mark.
Now that the spell of volatilities is behind it, cryptocurrencies show a promise in the future.
Why Crypto Markets May Emerge Stronger from COVID-19
This global pandemic has brought us to a point where the old ways of life are being questioned and a path for ushering in a new world order is being explored. This turning point may well be what was needed for the dawn of the Bitcoin era, where cryptocurrencies will take precedence over traditional currencies, if not replace them in the long run. Here’s why:
- Crypto is the New Gold: Gold has traditionally been considered the safest investment with a guaranteed high RoI. However, this is a physical asset that requires logistics and transport support to be able to contribute to the economy. At a time when the entire world is in a lockdown, the gold coffers have proven of little value. Bitcoin and other cryptocurrencies, on the other hand, continue to be mined as these exist strictly in the cyberspace and a free from any restrictions of borders, travel and transits.
- A Promise for Future Economy: Given that the cryptocurrency protocols are unregulated, Bitcoin and its counterparts may well emerge as a viable alternative to traditional currencies for bailing the world out of this unprecedented economic turmoil.
- A model of financial security: The COVID-19 pandemic has already set into motion a wide-range of economic crisis, right from liquidity to regulations and scams. At this time when financial resources may be drying up on an industrial as well as a personal level, cryptocurrency with its safe blockchain ledgers has emerged as a model of financial security.
A surge in the use of fintech apps seen in Europe and other parts of the world on the recent months supports the theory that the crypto markets are immune to the Coronavirus threat and its consequent economic implications.