Did COVID-19 Affect The Bitcoin Market?

Did COVID-19 Affect The Bitcoin Market?

COVID-19 created an unsurpassed global impact in many areas of our lives. It has caused many people to lose jobs, for businesses to close for good, and even for investors to have their multiple assets have a loss of value. However, one question comes to mind--how did COVID-19 impact the Bitcoin market?

Interestingly, the demand for bitcoin and other cryptocurrencies have grown despite the ongoing pandemic. In fact, the peer-to-peer trading of BTC reached its highest peak in several countries such as Morocco, Argentina, Chile, and Valenzuela. 

As the stock market experienced a crash as of March 2020, it is surprising to note that cryptocurrency trading remained relatively steadfast, with trends showing some growth over the coming months.

The Trend of Bitcoin During COVID-19

Just like other investing pursuits, BTC and other cryptocurrencies experienced a dip in value during March 2020 COVID-19 panic. This dip in value is caused by investors who have lost their confidence in the market, fearing that the spreading of the virus will affect their investments in various business industries.

The same trend was seen for bitcoin, but the great thing is, the value of BTC went back to its pre-pandemic levels in February 2020. What could be the possible reasons for this confidence in the bitcoin market?

Increased interest in digital markets

There has never been more time where people have relied heavily on the power of technology to get things going. Physical meetings were replaced by video conferences. Industries such as travel, restaurants, schools, as well as rehab centers for alcohol & drugs, have to shift some of their workforces at home or in social distancing measures. Instead of in-person jobs, people resorted to working at home using their devices. This time spent on the virtual space caused a spike of interest in the digital markets, particularly cryptocurrency trading.

Realistically, BTC is shown to have growing popularity regardless of the pandemic affecting the market. There is a general increased interest in digital currencies because of its quick turnaround and autonomous qualities that make it a good choice for people who cannot access traditional currencies right away.

Untouched by physical factors

Aside from investor influence, Bitcoin is less affected by external events such as the COVID-19 or industry-related issues. Unlike stocks and bonds which can be easily swept by events and decisions of the few key stakeholders, BTC is immune to these potential influencers.

That is the beauty of cryptocurrency--collectively, people are much free to decide on the value of their investments, without having to feat about the effects of global crises, economic crashes, and other external anomalies that could happen in an instant.

Retaining value in BTC

Since investors have since placed their confidence in their Bitcoin shares, many of these reasons can be traced to their desire to retain the value of their investments through BTC. The unprecedented impact of COVID-19 in many economies can even hold the US Dollar value hostage, with social and political issues affecting it as well. 

At this point, no one knows what might happen to the conventional currencies--and this is why many investors trust BTC to retain the value of their assets.

More countries relying on BTC

The limitations of business and trading that COVID-19 brought caused many developing countries such as Argentina, Morocco, and Venezuela to rely on Bitcoin. The pandemic can potentially cause lasting effects on the growth of these countries, which may be crippling in their economic stability.

Through Bitcoin, these negative impacts can be mitigated because of BTC’s relative stability compared to the currencies of these developing countries. Take, for example, Venezuela’s inflation rate which grew to 10,000,000% in 2019. As developing countries invest more in Bitcoin, the values of their assets are not likely to decline as compared to their local currencies.

Bitcoin’s novelty and promising future

Even without the pandemic, BTC has steadily increased in its popularity as a new form of digital investment. The general appeal of Bitcoin for investors is its ability to convert into any form of money without any kind of conversion loss or manipulation.

This promising offer laid out by Bitcoin gives investors hope that cannot be replicated by banks or other conventional forms of assets. In fact, venture capitalists such as Tim Draper believes that BTC will save the financial future of millennials. He predicts that Bitcoin’s values will rise even more not just during, but after the effects of COVID-19 wanes.

BTC: The Dark Horse of Investing

Big players in the investing world may have not taken the Bitcoin seriously in its infancy stages, but its reliability despite collapsing economies showed that it is indeed the “Dark Horse” of investing. The proof of its recovery showed millions of investors about the potential it holds for saving asset values.

 

Sources:

  1. Businessinsider.com - “From the COVID-19 panic to the Dutch Tulip mania in 1637, here are 10 of the worst stock market crashes in history”.
  2. Cnbc.com - “Venezuela hyperinflation hits 10 million percent. ‘Shock therapy’ may be the only chance to undo the economic damage”.
  3. Finextra.com - “COVID-19 Outbreak and Crypto Market”.
Publication date: 
07/10/2020 - 17:45
Disclaimer

The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.