The worst crisis of the century is setting the stage for Bitcoin
The current economies of the world are suffering due to the COVID-19 pandemic, which has revealed the main benefits of decentralized technology and cryptocurrencies.
The COVID-19 pandemic has devastated the economies of countries around the world and shows no signs of stopping. The overwhelming response from world governments has been to put their countries under complete or partial closure. Arguably, this has saved many lives, but the economic consequences have been wild. Only the United States is on track to see a record 30% unemployment rate and an unprecedented 30% drop in gross domestic product. China, the European Union, Japan and the United Kingdom are not doing much better.
In these uncertain times, investors are naturally nervous. After the massive fall in March, and amid rising unemployment and fear, the stock market has again hit new highs, amid a pandemic. It seems that the American people and Wall Street live in parallel universes, suggesting that the latest recovery could be little more than a dangerous bubble.
When that March sell-off spread to the world of cryptocurrencies and Bitcoin (BTC) subsequently dropped to below $ 3,600, it shook the faith of those who were proclaiming Bitcoin’s safe-haven narrative. However, in the weeks since then, Bitcoin has recovered faster than any other asset. If the global macro situation worsens, we can see more downward pressure on Bitcoin prices in the short term. Meanwhile, the long-term outlook for BTC could not be more bullish. Here’s why the worst crisis in a century is setting the stage for Bitcoin.
Infinite quantitative expansion
Along with the closings, another measure that has been taken especially by the wealthiest nations is to throw money at the coronavirus problem. More than $ 8 trillion has been spent globally to counter the effects – and we are still in the throes of the crisis. It is becoming clear that $ 8 trillion is not even enough. So how much will be enough and how sustainable will it be?
Faced with falling GDP, record unemployment and many companies forced to close their doors forever, unlimited quantitative easing puts even the wealthiest nations at risk. The risk of major world currencies experiencing hyperinflation will increase. Although the United States or the United Kingdom is unlikely to suffer the same scenarios as developing countries like Venezuela or Argentina, the relentless printing of money will at least lead to currencies becoming a poor store of value as their power Purchase is eroded and savers receive a negative return on a bank.
In today’s climate, most ordinary people may not be thinking about investing right now as much as keeping food on the table. However, wealthy and experienced investors have started to see Bitcoin’s potential at last. The infamous macroinverter Paul Tudor Jones has recently added Bitcoin to his public portfolio, calling him “the fastest horse”. He also explained that he bought it as coverage for the inflation that he saw coming from all the printing of money. That sends a powerful message.
Other than the brief correlation to the stock market earlier this year, Bitcoin has no correlation to other markets. Risk managers understand the importance of diversifying an investment portfolio, especially in times like these, and many investors will likely follow the example of Tudor Jones.
In contrast, Bitcoin becomes scarcer
Almost as if to show Bitcoin’s key quality, Bitcoin’s halving reduced the block’s reward for miners, meaning that unlike Fiat, its supply will drop. It is such a stark contrast that even skeptics have to stop and think, or at least study the value of owning a Bitcoin. BTC’s refuge status appears to be regaining ground as it aims to test the $ 10,000 barrier once again after halving. Despite the Black Thursday event and all the volatility, it has shown an impressive recovery and is still at 35% annual growth.
In fact, after this third halving and the recent euphoria for gold, Bitcoin as “digital gold” has more weight now than ever. The demand for gold will increase its production, but very soon BTC’s inflation rate will be even “harder” than that of gold. In addition to the price, the fundamentals look good. The hash rate has dropped a bit after halving, but it’s still close to all-time highs. With zero government stimuli or bailouts, it has recovered on its own.
The industry continues to grow
Despite record unemployment, the crypto space has strengthened with many companies, particularly exchanges, in a wave of hiring, including Kraken and OKEx. The largest US financial institution, JPMorgan, recently announced that it would open bank accounts for the Gemini and Coinbase exchanges.
The $ 10 billion cryptocurrency hedge fund Renaissance Technologies has approved offering CME Group cash-settled BTC contracts, and the Grayscale Investment Trust has recently seen a record inflow of designated institutional funds in the purchase of Bitcoin.
More eyes are turning to Bitcoin
Not only have smart money and institutional dollars started to arrive, but ordinary people are (perhaps for the first time) questioning the value of money. It may not be something you have looked at before, but seeing billions of dollars seemingly created out of thin air makes you question how money is created. This lifts a veil over government practices and makes a stronger case for Bitcoin.
As Bitcoin continues to demonstrate its value and emerge as a must-have item in investor portfolios, more eyes will turn to it. Many of the people who stay at home will start looking for more information about him and will realize that they have an alternative to the current financial system. Now more than ever it is time for the crypto community to shine through the provision of high-quality educational content.
To that end, OKEx has launched a Beacon Program later this month specifically tailored to the most affected European region. This will be an opportunity for people affected by the crisis to delve into Blockchain technology and the crypto space. Through the content of the OKEx executive lecture and mentoring, we hope to inspire and kick-start new careers so people can come out of the crisis well.
The COVID-19 – for all the hardships and deaths it has caused – may be Bitcoin’s biggest catalyst so far.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.