The IMPACT of Covid19 on Crypto Currency and its future!
The beginning of March 2020 was disastrous for major global markets. When news of the coronavirus pandemic spread, the stock market saw its fastest fall in history and its most dramatic since 1929. The hospitality and tourism sectors were among those hit the hardest as nations implemented travel restrictions and lockdown policies. These caused oil prices to plunge further in an already ongoing price war between Russia and Saudi Arabia.
All the panic from the uncertainty brought about by the pandemic led to a liquidity crisis before an economic crisis even set off. Investors frantically converted their holdings into cash to safeguard their finances. Unfortunately, the cryptocurrency market wasn’t spared this anxiety and bitcoin and altcoin prices collapsed.
How cryptocurrency bounced back
The price of bitcoin was slashed by half in March, falling to as low as 3,780 USD. Fast forward to today and the popular cryptocurrency has rebounded, even reaching its highest all time at over 42,000 USD in Dec. 2020. The sentiment towards cryptocurrency has definitely turned bullish. Even China, known for its love-hate relationship with cryptocurrency, declared it as the number one asset of 2020 because of its stellar performance in the middle of financial turmoil.
Bitcoin’s quick recovery is a display of the market’s resilience. Crypto proponents have always preached that digital currencies have no correlation to other asset classes, a sentiment underscored by how cryptocurrency is clearly outperforming other mainstream and institutionalised assets. A quick look at bitcoin’s current trading price highlights how it’s been rising steadily since its lowest point in March aside from a few price corrections. This uptrend has strengthened interest in bitcoin — and cryptocurrency in general — in Asia and the rest of the world.
Heightened need for digital financial services
Cryptocurrency is starting to gain a reputation as a safe haven investment, much like gold and other metals (TESLA have bought for 1.5 Billion BTC in Feb. 2021). But that’s not the only reason investors should diversify their investment portfolio with bitcoin and altcoins. The shock of the pandemic has prompted businesses to accelerate their digital infrastructure which includes tech-enabled and remote financial services. Virtual currencies have stepped in to fill that need. In fact, they’ve been ramping up to do so for quite some time and the pandemic has been the main accelerator. Banks are racing to roll out crypto-based services which include withdrawals, deposits, and payment transfers via digital wallets.
Furthermore, dominant payment gateways like PayPal have announced support for cryptocurrencies that can enable consumers to buy, hold, and sell with virtual assets. This can fuel greater adoption for cryptocurrencies like bitcoin and its competitors which have proven to be a convenient and reliable solution to society’s evolving demands.
Regulation still in the way
However, regulation remains the biggest challenge for cryptocurrencies as a whole. While it’s certainly becoming more mainstream, it is still not as widely accepted and regulated in many countries. One of the biggest exceptions is Singapore. The Monetary Authority of Singapore (MAS) has established a regulatory framework that can make it easier to buy, sell, and hold cryptocurrencies for lone investors and businesses alike. The MAS recognises the real world applications of digital coins such as lower transaction costs, greater efficiency, and security.
Given cryptocurrency’s potential to change the financial landscape and beyond, countries have to act faster in establishing strong regulations. But if there’s one thing that the pandemic has highlighted is that bitcoin and altcoins have real value in today’s world – and this isn’t mere speculation. It is fact.