In the midst of Coronavirus, community closures and a marked reduction in recreational retail means that markets are feeling a bit ill themselves. Could bitcoin be the antidote?
Questions have been flying between traders and speculators over the peculiar behavior of bitcoin. Where does this leave bitcoin and other cryptocurrencies? Are they proving to be the safe-haven asset they’ve been touted to be, or are they showing that they are just as susceptible to economic collapse as any of the others?
So far, while it’s still a bit early to tell, crypto seems to be outperforming many other markets. Bitcoin is no stranger to massive swings in value and has pretty much always had high historical volatility. But the crypto values, along with just about every other major market value, slammed into the ground as the Coronavirus took hold. Despite this wide-sweeping downturn, bitcoin has been looking far more stable than a number of other traditional assets.
While it makes sense that things like oil, defense, even governmental securities could surely face prolonged slumps as global and local economies slow- cryptocurrencies like bitcoin are beginning to stabilize far more quickly than these. Which may signal that the era of crypto is absolutely upon us.
What Crypto Markets are Up To
On February 13, Bitcoin reached a massive high and was trading at $10,500, giving investors everywhere a reason to celebrate. Some even speculated that because bitcoin is a global currency and value store, it was being used as a safe-haven asset as Coronavirus began to ramp up in China. By February 19, the coin was trading below $8,800.
As the virus began its rapid global spread, bitcoin values continued to plummet, until March 13- when the bottom all but completely fell out. On this date, bitcoin closed at just over $4,200. A grim circumstance for crypto traders, or a clever time to get in on a historically cost-prohibitive market?
There is reasonable logic in believing that cryptocurrencies are likely to keep their values during a crisis, as well as surge during normalization. This is largely because they are decentralized. These currencies don’t rely on governments or intermediaries to function, they are driven by the people that own and use them.
Another encouraging factor is that cryptos are borderless. They can be freely traded and used in almost any country- provided the law allows it. There are no foreign transaction fees, bitcoin doesn’t have to go through multiple institutional channels to be able to function between one country and another.
Read more articles here at Best Bitcoin Tumbler like Business and Bitcoin: If You Have a Business, Use Bitcoin! and Understanding Altcoins: How Many Are There?
Why Were they Hit So Hard
If indeed bitcoin and other cryptocurrencies are a useful tool when it comes to situations that gravely influence the capitalist system as we know it- what’s with the crash?
Coronavirus isn’t the only thing that has bitcoin traders concerned about values and the future of the coin. With the halving just around the corner and bitcoin’s enormous energy demands brought into question- the virus is just one of many pitfalls bitcoin is poised to see come it’s way.
It’s also not just bitcoin- but almost every other major cryptocurrency has seen massive drops in price as panic trades are really starting to surface. Leaving many investors to see this as a renewed opportunity to buy crypto in bulk, pursue further crypto technology advancement, and encourage the use of blockchain as necessary changes in economic systems occur.
Another reason crypto and bitcoin were hit so hard is that these assets make up the whole of what is still a very nascent market. Meaning that newer or novice investors may be panic selling their shares, while seasoned traders are merely locking theirs down. This may well account for why bitcoin price didn’t completely drop out and is still trading for over $4,000 per coin.
Because just about every major market was hit, most traders are experiencing an understandable amount of anxiety concerning trading at this moment. Uncertainty is causing markets to stay low and for experienced investors to hold onto the assets they have. This HOLDR attitude means that few will be looking to sell off many assets within the coming months, as the entire world waits with bated breath to see what comes next.
Has Coronavirus Infected Bitcoin? The Future of Potential
Despite the sudden downturn, most of the best-known crypto markets are actually looking as if they are beginning to stabilize. Which could mean big gains in the future as lower prices provide an avenue for new buyers.
What’s more, is that cryptocurrencies and blockchain technology could prove to be exceedingly useful, should life as we know it undergo the change that seems inevitable now. Due to the rampant viral spread and lack of preparedness for a pandemic of this magnitude, Coronavirus is indeed changing the way people live. With even more change evident on the horizon.
From the way people eat, work, learn, socialize, travel… many of the modalities of daily life have been abruptly, and in some cases irreversibly, changed. Stark contrasts between priority and necessity have been brought to light in ways people haven’t seen in decades. Pushing for greater use and function of online tools for working and consuming.
Machine learning and production has proven to be a godsend for cities and countries with harsh quarantine measures and penalties. Being the only way that some necessary goods can be safely produced or obtained. Online ordering of goods has skyrocketed, specifically for non-local and hard to get items. Meaning that the global economy may become more decentralized in the future; tying consumers directly with manufacturers and needing a global currency to establish trade systems.
Crypto tokenization of tradable assets may indeed prove to be the future, with the internet becoming a more universal tool over the recreational playground it’s proven to be thus far. Blockchain technologies that track and coordinate supply line functions could prove to help prevent shortages in the future.
The power of the future of bitcoin and cryptocurrencies may be speculative, but it does hold good promise for a different tomorrow should one come.