The Corona Effect on Crypto Market: Bleak or Bright?
The COVID-19 pandemic is going to be around for a while, the virus is in no hurry to return, it seems. As predicted, it has wreaked havoc on even the most developed economies. Share markets in the US, India, China, and Europe tumbled down, slightly recovered, and now are anticipating another fall as the second wave of infection is due. Rare assets, traditionally considered secure in all stock exchanges and as a diversification tool in investment portfolios, have also been witness to the quiver in the market. Businesses, small and large, after lockdowns in many countries, are now slowly limping back into action, but the damage is in plain sight. Under the current circumstances, recovery will be a long and tedious process.
What about cryptocurrencies? Are they holding up against the global economic downturn?
How the Crypto Market is Responding to the Global Recession?
As most assets are showing their susceptibility to the COVID-19 curve, investors across the world are looking for a safe haven; a defense against the volatility in the market. This explains the sudden rise in interest in cryptocurrencies. People are actively on the lookout for a less vulnerable alternative to cope up with the severe economic crisis which is likely going to be in for a long haul. Although it remains a fact that the virus has inflicted its share of pain on the cryptocurrency market, it has been rebounding pretty quicker than other assets.
Let’s take the example of the most popular cryptocurrency as an example. Bitcoin was at just above $5000 in the first week of March. The sudden dip in economic activities forced many investors to answer margin calls by liquidating their assets. As expected, bitcoin took the brunt of the panic-driven liquidity crunch and what was followed was a plunge in the prices of cryptocurrencies. Despite this, many investors soon realized that there will never be a better time to invest in cryptocurrencies. In the first week of May, it sprung back to $9000 and has been gradually picking up ever since, currently standing at $9,432.12.
The massive selldown followed by the sudden rally is a reflection of the curiosity spike in cryptocurrencies among investors, who have forever been avoiding the newbie asset for fear of the unknown. The fall in cryptocurrency prices was mostly triggered by panic and apprehensions. As economic activities picked up gradually, the value of bitcoin steadily rose too. Unless a severe money crunch pressurizes you into selling, it is advised to not lose hold over your cryptocurrencies.
Due to its essentially decentralized nature, cryptocurrencies are impervious to economic, political, geographical, or environmental changes, unlike traditional currencies. Investors are only paying attention to this comparative edge of cryptocurrencies now that we are knee-deep in economic adversity. For example, Revolut Ltd, one of the British financial technology companies headquartered in London, United Kingdom, announced its decision to make cryptocurrency available to all its seven million customers recently. The injection of unprecedented stimulus into the economies to curb the repercussions of the pandemic prompted this response from Revolut.
The COVID-induced new normal extends to our way of communication, travel plans, work schedules, opening hours, and even consumption trends. As the pandemic continues to vandalize industries, cryptocurrencies have proven to be one of the safest investment options, only second to the yellow metal. More companies will soon follow in the footsteps of Revolut. Mass-adoption of cryptocurrencies is in clear view.
The bullish sentiment in the crypto market is here to stay. According to a latest report, the value of bitcoin will reach as high as $15,499 by the end of the year 2020. Investors want to plow their money into assets that can withstand the recession. In the post-COVID era, cryptocurrencies will be an integral part of a diverse investment portfolio. They remain the most attractive hedge against the lack of certainty in the global markets.
Bithumb Global — Simplifying Crypto Trading
Bithumb Global has always been a trailblazer in the field of digital assets fintech innovations. In the wake of the economic recession caused by the global pandemic, we have wanted our community of crypto enthusiasts, traders and investors to grow and confidently invest and trade in digital assets with security, safety and confidence.
We have released advanced features to make crypto trading faster and simpler. When most businesses and investors are battling with capital shortage, we recently launched our margin trading platform that has amassed great popularity and continues to see higher volumes of trading each day. Margin trading comes as a great relief to traders who can now borrow assets from digital asset exchanges and use them for trading. Only a small amount of initial capital is required to yield a considerably larger profit. As of now, we offer six trading pairs, BTC/USDT, ETH/USDT, LTC/USDT, XRP/USDT, BCH/USDT and BSV/USDT for margin trading with 10X leverage.
Bithumb Global has always been at the forefront of developments in the crypto world and we will be coming up with more innovative features to bring crypto to every household. We invite crypto enthusiasts the world over to take a look at our innovative solutions that they can leverage to benefit from the limitless potential of cryptocurrencies.
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