Mar 26, 2020
The Coronavirus-Bitcoin Puzzle: How Coronavirus Pandemic Will Impact Cryptocurrency Adoption
By The Crypto Basic on The Capital
Cryptocurrencies are well known as a singularly volatile asset, as ominous terms like “flash crash” are incorporated into their language and vernacular. Since cryptocurrencies became a more conventional investment asset in 2017, several of these sudden and unexpected price drops, often referred to as black swans, have drawn attention and amazed investors.
For years, those black swans remained anathema on the investment period where the stock market, which has recently completed its most extended bull market in records, proceeded to climb higher.
Of course, few black swans were as blatant and shocking as Bitcoin’s 50% drop overnight on March 12. In this case, the worldwide shock caused by the Coronavirus caused the Dow Jones Industrial Average and other markets around the world to plummet.
The iPath Series B S&P 500 Short-Term Futures bounced from $ 38 to $ 47 the very day. At its deepest point, Bitcoin was exchanging at $ 3,600, a notable drop in its trading just a few weeks ago.
While Bitcoin's price has somewhat improved since the drop: At the time of writing, Bitcoin’s price is close to $ 6600, the event is making numerous investors, fans, and random observers to question if they can ever learn digital assets whatever is sufficient to foretell its price moves.
Even prominent crypto analyst John Bollinger was shocked by Bitcoin’s surprising price drop. In a tweet, he writes, “Bitcoin remains a sufferer of the COVID-19 fear. I certainly didn’t notice it occurring, I believed it might function as an effective safe haven.”
Ultimately, the numerous black swan events throughout crypto’s well-documented history make it clear that education alone is not the key to accurately predicting crypto. Instead, investors should work to understand digital assets and their potential to help make critical determinations about their effectiveness and long-term value.
Predictions are impossible?
The Black swan situations, such as the one exhibited by COVID-19, will proceed to upset both new and organized markets and are by character unpredictable. But other circumstances make crypto price predictions very challenging.
As Robert Navalon, CBO of NewsCrypto, a cryptocurrency investment and education platform, explains, “Cryptocurrency investors need to understand the market and the platforms where they place their money, but that doesn’t mean they can have a crystal ball that identifies the risks. before they arise. Uncertainty should not prevent investors from chasing what they believe in. “
For starters, cryptocurrencies remain an emerging asset. In various ways, it’s tough to memorize a time when Bitcoin, blockchain, and digital assets didn’t command our thought.
In fact, several of those programs are only some years old and their real-world associations are determined on a daily basis between the millions of people involved in those assets.
Cryptocurrency investors require to know the market where they place their money, relieve risk, and envision possibly profitable answers. The mixture of all three characters is essential for success.
As a result, technology is, to some degree, unproven, and people are not yet familiar with the asset. When combined with perpetual media disbelief, investors are clearly getting mixed messages at best.
While the events of the black swan may seem obvious in retrospect, even the best analysts could not predict a global pandemic that is overturning the global economy.
Significant Alternatives
Of course, when it comes to making sound investment decisions, ignorance is the furthest thing from happiness. A crypto education can help investors obtain a blueprint of the land that equips them to search for products and platforms that align with their interests, ideals and investment strategy.
Coronavirus Impact On Crypto Adoption
If the coronavirus first appeared to be purely a health crisis, the past few weeks have shown that it is just the opposite. The global stock market has plummeted, and many sectors currently considered nonessentials are facing massive closings, wreaking havoc across all industries, including travel, hospitality and retail.
Crypto markets have not escaped unscathed, either, reflecting the global financial crisis. On March 12, the price of Bitcoin collapsed more than 40%. The timing could not have been more unfortunate, given that the crypto price had started showing long-awaited bullish signals.
At the time of this writing, there have been tentative signs of a recovery in Bitcoin’s price, but not yet at its early March levels. Bitcoin’s next halving in May may still offer a glimmer of hope that markets will recover in the coming months.
It remains to be seen whether or not that rebound will extend to the Defi movement that once flourished. In mid-February, before the coronavirus panic took hold, there was more than $ 1.2 billion in Defi.
However, as cryptocurrency prices fell dramatically on March 12, Defi suffered its first “Black Swan” event. More than $ 4 million in Maker loans were suddenly backed by no underlying asset, putting Ethereum’s most prominent dApp at risk of an emergency shutdown. Currently, the total assets invested in Defi amount to just over $ 500 million, less than half the 2020 peak.
Coronavirus as a boost for adoption?
Before the COVID-19 panic erupted, the corporate adoption of blockchain looked promising. In early March, details surfaced that three-quarters of officials see blockchain as an important preference in 2020.
With the sudden drop in stock prices, it remains to be seen whether companies will still set aside budgets for digital transformation efforts.
However, we do get close to Lior Yaffe, lead developer and co-founder of Jelurida, the company that powers the Ardor and Nxt blockchains for their take on things. He believes it is not so clear, stating:
“The Cryptocurrencies are living in the virtual system, Until people have a working internet connection and the community remains healthy, it is hard to detect any direct influence of the virus on blockchain adoption.”
The drop in Bitcoin prices certainly seems to have piqued the interest of some retail investors. Crypto fixed ramp provider Simplex reported that the purchase of cryptocurrencies increased fourfold on March 12–14.
“It is apparent that numerous people have witnessed the current downturn as a buying chance rather than a hint that the crypto finance exposition has been nullified,” Simplex CEO Nimrod Lehavi
Europe-based investors, in particular, bought BTC as it sank to $ 6,000. It is certainly not a coincidence that Europe was the focal point of the virus during that week.
Crypto and Corona: the same mistakes by governments?
The growing popularity of cryptocurrencies has long had regulators scratching their heads. Some countries, such as Switzerland or Singapore, have adopted a more relaxed and pragmatic approach to technology, which has led to the proliferation of new companies in these centers.
However, others, including the US. USA And India have tended to be more opaque in its treatment of cryptocurrencies and coin offerings. This approach has led to accusations of innovation being stifled in these countries, which harbor a host of programming talents.
Lior Yaffe believes that this disparity in approach between different governments is also visible in efforts to tackle the coronavirus, and explains how she believes it is hampering success in both cases.
“A very much more useful strategy to administering with the pandemic would have been for a global partner of specialists, accountable for the well-being of humankind, to publish guidelines based on accurate information, dropping aside political concerns.”
