This article covers how cryptocurrency markets have been impacted by COVID-19.
With a sudden outbreak of coronavirus which initiated in China and spread like a wildfire throughout the world, the governments of affected countries gravitated towards imposing a complete lockdown to prevent the virus from spreading. Since COVID-19 affected nearly every business and market one way or the other, cryptocurrency markets were no different. As a result of strict lockdown, numerous markets, including the digital currency market faced financial loss. It was reported to fell lower than US$118 billion in March 2020 from US$308 billion in February 2020.
Shortly after the fall of cryptocurrency kicked off., bitcoin lost 50% of its value in the month of March 2020. Ether, which is considered as the second-biggest digital asset, fell lower than 66% of its market value in March. Stocks and digital currencies faced a similar downfall in their values. However, bitcoin experienced recovery from its loss while stocks failed to meet any such sharp gain. Numerous people are also taking advantage of the current situation and considering investing in stocks. According to the best online brokers and the best expert advisor brokers, with more savings and low shares, stock investment is a wise choice.
As we witness the rise and fall in cryptocurrency while coronavirus continues its journey to its peak, here is a quick overview of how the market of cryptocurrency has been impacted so far.
1. Fluctuation in Cryptocurrency Price
Statistics from the past 4 months show some rapid changes in the price of cryptocurrencies indicating the unpredictability of the crypto markets. Soon after coronavirus began to spread, the prices of cryptocurrency began to decline to the point that it lost over half of its value. The fear of coronavirus led to the rise in cryptocurrency’s price. A wide swing of price has been witnessed in the crypto market. Cryptocurrencies including bitcoin cash, XRP, and Ethereum experienced a sharp gain since the capital investments were being turned into digital assets. Despite the fluctuations, cryptocurrency experienced a rise in price.
2. A Better Protective Asset than the Gold
Historical events tell us that gold has always been considered as the most protective asset under difficult economic circumstances. However, the unpredictable combination of advanced technology, the digital market, and the global pandemic has raised many questions. One of them is, does gold really act as a protective asset, as the experts call it -safe heaven, in the 21st century?
In this everlasting competition between the gold and bitcoin for the title of safe heaven, the gold seems to be on the losing side. As the world faces economic crises, cryptocurrencies have experienced numerous benefits. Unlike gold which heavily relies on transports and logistics, digital currency is present in cyberspace therefore, lack of transportation and lockdown does not affect cryptocurrency as bad as they affect the gold.
3. Cancellation of Cryptocurrency Conferences
The outbreak of coronavirus caused the country-wide lockdown in most of the countries in the world. Many businesses switched to work from home options concerning the safety of their employees. Similarly, all the blockchain conferences were canceled immediately until further notice. It is one of the challenges that crypto markets face. Hopefully, the advanced technology would save the day, providing an opportunity to conduct the conference virtually.
4. Challenge of Fundraising
As the prices in the IOC market started declining, the next best target for blockchain startups to attract was venture capital. But the coronavirus and its impacts on the world economies is one of the massive obstacles in the way of attracting investors. Without private meetings, it is quite difficult to convince the investors to invest in the startups especially now as they are very vigilant in their investments.
5. Stablecoins faces Sharp Gain
Stablecoins are one of the types of cryptocurrency that has experienced a high rise during this pandemic. After the fear of coronavirus spread throughout the world, this cryptocurrency faced an increase in interest. The primary reason behind the increase in their popularity is that the price of stablecoin does not change rapidly neither much fluctuations in price occur as compared to other cryptocurrencies.
Coronavirus has had a significant impact on the financial markets. Multiple businesses have been closed and the values of their assets have fallen down. As the events unfold and the world learns new ways to survive the deadly pandemic, it is safe to say that bitcoins and other cryptocurrencies will face a rise in their values. We can expect to see the future routinely transactions being carried out through cryptocurrencies. Although coronavirus brought with it several emerging threats and hurdles, analysts are confident that a long-term impact of Coronavirus will bring a lot of advantages to the crypto market.