Market Outlook #3 嘉库市场展望 #3
Latest market trends, highlights and news 最新市场趋势，亮点和新闻
The effect of COVID-19 pandemic affects almost everyone around the world. While the COVID-19 crisis impacts individuals, it also profoundly affects many industries. More than a week after the announcement by the World Health Organisation that Covid-19 is characterised as a global pandemic, many global investors question whether the market downturn signals a global recession, and what are the impacts to the global economy if the virus continues to spread worldwide. Other than tourism, travel, and manufacturing suffering during this gloomy period, cryptocurrency assets also crashed due to the pandemic as well.
Governments announced liquidity injections & slashed interest rates in a futile attempt to keep cash markets afloat.
The price of BTC dropped aggressively — in correlation with the stock market — and the majority of replacement coins drops further. While some crypto assets recently have managed to recover some of their losses, the drop in asset prices affects almost 80% of the cryptocurrency in the market. The debate now is about how closely Bitcoin’s price performance is tied to the U.S. stock market. The correlation between BTC and the S&P 500 has now reached a two-year high and this may be a bearish sign for the crypto markets. Historical data shows that such a high correlation is often accompanied by major downturns in BTC’s value. However, not all investors agree about this. Since the BTC lows of $3,775 in March, BTC has rallied by about 77%. Compare that with the S&P 500, which has fallen by 7.4%, and the Dow Jones, which is off by about 10% over the same period.
Countries around the world are now trying to solve and support individuals who are affected by unemployment due to coronavirus and how to manage a healthy economy. In the United States of America, one Democratic representative in Congress has proposed giving $2,000 a month to every adult — and $1,000 to every child. Other nations are similarly exploring radical measures, with the United Kingdom recently announcing plans to pay 80% of the wages of workers on furlough. Not all are liking this and has been taken aback by these ideas due to the possibility of massive inflation — and would even benefit cryptocurrency investors as Bitcoin will arise as the favourable option by the mass.
While bitcoin may be well-positioned to benefit from central bank cash injections and the zero-interest rates environment, the same cannot be said for smaller cryptocurrency projects.
Since the ICO/IEO market is no longer deem realistic, blockchain startups are now primarily looking towards venture capitalists to raise funds. However, due to the coronavirus and the uncertainty of the economy it has become more challenging for blockchain projects in the last few weeks.
The use of stablecoins has increased over the last few weeks. Especially dollar-backed digital currencies have seen an influx of funds as traders and investors moved funds into stable assets when risky assets collapsed. The two leading dollar-backed stablecoins — Tether USD (USDT) and USD Coin (USDC) — have seen substantial inflows of trading volume during the market crash.
Regardless of the current financial climate, investors who have cryptocurrencies in their portfolio will be interested to see how cryptocurrency assets will continue responding to this unfolding crisis.
Investors who bought cryptocurrencies as a hedge against the traditional market were affected when their crypto assets were not spared from the market crash. Bitcoin dipped a whopping 25% a day after the WHO declaration of a global pandemic and altcoins suffered a heavier crash.
While fiat and crypto are two different types of assets, investors are opting for cryptocurrencies for more diversification, and also on the belief that crypto will deliver a much more significant return in the future. However, it is also interesting to note how cryptocurrencies will compare with historical investments of gold and silver for mass-market adoption.
Crypto is still looking POSITIVE
Given the current unfavorable economy worldwide, it is not surprising to see a cryptocurrency market crash. However, cryptocurrency is still looking optimistic in the long run. Governments are actively introducing corresponding fiscal policies to respond to the situation, which will have positive impacts on the crypto market.
Recently, the Supreme Court of India has turnover the previous ban on financial institutions from providing banking services to cryptocurrency companies from the Reserve Bank of India. In addition, traditional industries are also actively exploring the possibilities of blockchain. Therefore, the blockchain’s financial inclusion and even mass adoption are still worth looking forward to.
***Disclaimer: This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to risk.
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由于ICO / IEO市场不再被认为是现实的，因此区块链初创企业现在主要是在寻求风险资本家筹集资金。但是，由于冠状病毒和经济的不确定性，在过去几周内，对于区块链项目而言，挑战性越来越大。
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