How Did COVID-19 Affect Cryptocurrency?
COVID-19 took the world by surprise, destabilizing economies around the globe. As the United States experiences a coin shortage and as many businesses turn away from cash, the question on many people’s minds is how did COVID-19 affect cryptocurrency?
The coronavirus has caused an unprecedented global economic crisis that has impacted billions of people, not entirely unlike the 2008 financial crisis that led to Bitcoin’s creation. Some industries have struggled to survive, while others have managed to re-establish themselves after the initial outbreak. However, blockchain and cryptocurrency experienced a relatively small impact.
Read on to learn how COVID-19 affected cryptocurrency in 2020.
COVID-19 Has Had a Positive Impact on Cryptocurrency
The COVID-19 pandemic has been fast-moving and has changed the way the world operates. Individuals have responded to local restrictions and social distancing measures by becoming more technologically connected. Remote working, video conferencing, and online shopping have become the new normal. If anything, COVID-19 has exposed weaknesses in established financial systems, and millions of people have been turned on to Bitcoin and other forms of cryptocurrency as a viable investment and banking alternative.
Factors That Have Helped The Popularity Of Cryptocurrency
Conventional banking is viewed as unsafe and too slow.
Many consumers view conventional banking and currency as inefficient. The previously mentioned coin shortage and concern about how long the virus might linger on the surface of physical money have caused many users to consider virtual and cryptocurrency as a viable alternative to physical banking and investing. Delays and fees associated with traditional banking may have gained negative attention.
If anything, the pandemic has nudged Americans towards going entirely cashless. Online banking was already on the rise but concerns about face to face money management may cause people to consider alternative monies.
Volatile stock market and financial instability.
In April of 2020, over 14% of Americans were out of work through no fault of their own. They had either been laid off or were furloughed because COVID-19 had limited their industries, and most had applied to receive unemployment benefits that were substantially less than their previous incomes.
Companies put a freeze on spending and the stock market took a steep nosedive, causing millions to experience huge losses in their retirement accounts and realize that the money they had invested was no longer secure nor guaranteed. This nationwide economic uncertainty paired with a slow-moving banking system and a volatile stock market is likely another reason that investors made the move to cryptocurrency.
Anonymity.
As most individuals have had an increased online presence due to lack of face to face communication, many have raised concerns about the extent to which businesses and governments are collecting data. Thus, the relative anonymity of cryptocurrency may be one factor that has contributed to its growth.
Increased Online Presence.
The pandemic has pushed the world towards an online ecosystem that relies heavily (and almost exclusively) on video meetings and digital financial transactions. Consumers who have been adjusting to working from home, have also had to adjust to handling their banking, investments, and other finances entirely online. This affects other financial institutions, such as investment advisors and consultants, who have been forced to recognize the potential of online tools and resources, including cryptocurrency like Bitcoin.
The Future of Cryptocurrency
There is no way to truly predict how the world will recover from the coronavirus pandemic, but it’s safe to say that the financial world has certainly changed. Some experts believe that Bitcoin could cement its status as a so-called safe-haven asset due to the pandemic, as investors are turning to cryptocurrency during this time of uncertainty. Gold is another of these assets that is considered “safe.”
A number of investors have turned to Bitcoin because they believe that inflation is coming as a result of a number of coronavirus stimulus packages. As the price of cryptocurrency continues to rise, U.S. Congressman Tom Emmer has said that expects Bitcoin to “get stronger” as the world emerges from the crisis. “As we come out of the crisis, Bitcoin isn’t going away,” Emmer said. He added the cryptocurrencies are going to “continue to become more and more important.”
There is the possibility of Bitcoin being considered a safe bet against global financial instability, and the confidence of future investors will certainly have a positive impact on its performance. However, Bitcoin and other forms of cryptocurrency are still investments, not sure things, and will still be subject to price swings and market fluctuations.
While many financial markets have swung up and down, Bitcoin prices have surged. Compared to its price back in March, the value of BTC has grown over 180%. There are other metrics that show that the price will continue to rise, adding to its popularity. There are more Bitcoin wallets now than there have been in the past, and more people are using cryptocurrency for day to day transactions in addition to investing.
Looking to Invest in Bitcoin? Look to Pelicoin.
So how did COVID-19 affect cryptocurrency? The pandemic has actually given it a huge boost in both value and public interest, due to market volatility and concern for safety. With cryptocurrency prices climbing, there’s never been a better time to buy or trade Bitcoin. And as neither the pandemic or its economic impacts show any sign of slowing down soon, you would be wise to invest your money in a currency that isn’t dependent on a traditional financial model.
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