The COVID-19 pandemic has seen economies all over the world slow down and is posed to continue, at least in the short-term. Governments worldwide have been sending their populations into lockdown, leading to rising unemployment and exacerbating an already tense economic situation. The United States alone is currently experiencing unemployment rates of 15%, which are predicted to rise past 32% before the end of the pandemic.
In stressful times like these, cryptocurrency and traditional investors are understandably nervous. The results of this were seen in March, which was host to one of the biggest ever market crashes – both stocks and cryptocurrencies were affected. During this time, the value of Bitcoin (BTC) dropped from over $10,000 to less than $4000 – a massive 60% decrease. Most other cryptocurrencies showed similar decreases, if not worse.
Although the pandemic continues and joblessness continues to rise, both cryptocurrency and traditional markets are returning to pre-COVID-19 values, even breaking new highs. Bitcoin has actually recovered faster than any other economic asset. Are the current market conditions sustainable during this period of economic downturn, Or are we experiencing a bubble that will soon crash again?
It’s unlikely that the cryptocurrency market will crash again due to the coronavirus. The initial panic has worn off, trading volumes are steadily increasing, and Bitcoin has picked up bullish momentum, passing the $10,000 mark at the start of June. This momentum has coincided with the Bitcoin halving, which is almost certainly going to lead to further growth. Although the prices aren’t as low as during the March crash, now is still a great time to invest in cryptocurrency.
Cryptocurrency vs. fiat currency
One point that has really been highlighted by COVID-19 is the differences between cryptocurrencies and traditional fiat currencies. Currently, banks worldwide are printing money trying to stimulate their economies with influxes of cash – a tactic that leads to inflation, which decreases the value of fiat currency.
On the other hand, one of the fundamental properties of Bitcoin and many other cryptocurrencies is that they can not be created at will – their value can not suddenly be halved due to more being printed.
At the same time these cash influxes are happening, the Bitcoin halving will slow down the production of Bitcoin and increase the value. It’s also not unlikely that some of that stimulus money will make its way into the crypto market, further boosting the value.
The fact that cryptocurrency overall has not only survived COVID-19, but is faring better than most economic instruments, lends itself to the resilience of cryptocurrencies. Cryptocurrency is going to be around for the long haul – it’s not going anywhere.
