Has COVID Infected the Cryptocurrency Markets?

By consultantsreview Team Thursday, 15 October 2020

Has COVID Infected the Cryptocurrency Markets?In early summer 2020, when the COVID virus was raging all over the world, financial pundits wondered how the pandemic would affect the cryptocurrency markets. Of all the various segments of the monetary universe, crypto is not only the newest but also the most untested, so a global health emergency would be a good way, so the thinking went, to test the stability of Bitcoin (BTC) and other big players in the market. Anyone who uses a bitcoin trading platform to buy and sell the popular cyber currencies knows that prices rise and fall based on dozens of factors. The grand experiment of COVID, from April 2020 onward, would reveal much.

As the year of COVID comes to a close, it's helpful to take an assessment, to examine all the obvious and lessthanobvious effects the pandemic had on cryptocurrencies, particularly the flagship coin that represents the industry as a whole, Bitcoin. Did prices dive, rise, remain unchanged? Did investors sell out and look for other opportunities? Is the golden era of cybercurrency over? Here's a detailed view of several things people all over the world learned during lockdowns and widespread viral testing that took place from early 2020 onward.

Prices Sank, Then Quickly Rebounded

Gold, Bitcoin, and Stocks all took an immediate price hit as soon as the viral surge began. But then something very strange happened in that stocks were very slow to recover, but the major cyber monies and gold came roaring back. Even when you chart the price of cryptos in terms of grams of gold, prices fell from about 200 grams per BTC to 100. That's a huge drop, but it completely reversed by early October. The stock market took much longer to return to pre-COVID price levels. Price rebounds obliterated the argument that cyber currencies were weak and susceptible to being wiped out by a major event.

The Safe Haven Argument is Stronger Than Ever

For centuries, people have turned to precious metals as a safe harbor in times of trouble. Based on the speed with which both BTC and gold prices came back from COVID-induced lows, it's clear that crypto-money is finding a place alongside the metals as a safe haven, at least during medical scares. Consider that it took less than six months for prices of both to return to normal.

Bitcoin Ideal Lockdown Form of Money

When you're sequestered at home with minimal access to retail stores, banks, and social gatherings, even cash and gold aren't of any use. Credit cards are at risk of hacking if they're overused in online purchases, so that leaves crypto as the ideal form of money during a quarantine. It only makes sense. In the computer age, the only link a homebound person has with the outside is a computer. The trend toward retail merchants accepting BTC and other coins had already begun pre-COVID, but now it has speeded up.

The Virus is Gone, Based on Bitcoin Prices

By any measure, the initial health effect on cybercoin is over. Not only have prices rebounded in terms of dollars but also in terms of grams of gold. Now, no one can deny that some of the early-2020 dire predictions were way off. In many ways, consumers, investors, and speculators have discovered that intangible, cyber assets are much more resilient than stocks, bonds, real estate, and dozens of other instruments. It's very possible that if another biological crisis hits, the cryptos will do much better than they did this time around. The 2020 pandemic was a dry run in many ways, and firmly established the strength and staying power of cyber coins, particularly BTC.

Governments Can't Intervene in Cryptocurrency Markets

If one lesson came out of the pandemic, it is that national governments are powerless to intervene and manipulate cryptocurrency values. Non-government forms of money rise and fall based on real events, not decisions made by boards and committees. This realization has only served to strengthen the role of cyber money as a safe haven from political intervention.

Bitcoin is an Ideal Hedge Against Stocks

There used to be a lot of doubt about the value of using crypto as a hedge against the traditional stock market. Now we know the truth that the coin that represents about 60 percent of its market, BTC, was an excellent hedge candidate when stocks were still stagnant in the summer months, as was gold. Indeed, many investors woke up to this fact and now view gold, cyber coins, and other hard assets as the best way to ride out a Wall Street downturn.

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