As we all know by now, the COVID-19 pandemic has caused a global upheaval that has permeated through various aspects of our daily lives. Beyond its apparent threat to public health, the pandemic has also caused financial markets all over the world to crash. Despite the non-centralized nature of cryptocurrency, the pandemic has also caused an increase in risk to this already-volatile asset.
COVID-19 has had a significant and adverse effect on the nascent industry of cryptocurrency. Apart from the various issues that the industry has had to deal with such as liquidity, numerous regulations and restrictions, and several scams, it’s a wonder that the pandemic hasn’t brought cryptocurrency to its knees.
Bitcoin Recovered Value Quicker Than Stock Market Counterparts
During the onset of the pandemic in March, the value of Bitcoin dropped as low as a measly $4,400. However, five months later, its value recovered, even making it to as high as $11,335 in its current value.
This is thanks to a phenomenon known as the “Bitcoin Halving”. This process is the halving of the Bitcoin rewarded to Bitcoin miners. This is done in order to control the number of Bitcoin produced and to help preserve the value of Bitcoin through scarcity. Bitcoin Halving occurs every 120,000 transactions.
Does This Make Bitcoin a Safe Haven?
It’s understandable why many people might think this, especially considering how Bitcoin has not only recovered, but grown while other investment options are still trying to recover. However, there are many reasons why Bitcoin cannot yet be determined as a safe haven, even when its current trajectory is similar to that of gold and silver.
The issue with Bitcoin and other cryptocurrencies is that they’re still difficult to convert into fiat currencies. And while more people worldwide are open to cryptocurrency, their liquidity is still nowhere near that of their stock market counterparts.
Even when cashless transactions are currently the payment method of choice in an attempt to maintain physical distancing, the fact remains that not many people are likely to look to cryptocurrencies until the digital currency can become easily convertible to cash.
Governments all over the world need to take bold measures in order to regulate cryptocurrencies. Those who haven’t invested in Bitcoin are unlikely to do so given the current state of the world, but for those who have already done so are likely to discover how easy it is to buy and sell Bitcoin. It’s difficult to say whether or not cryptocurrency is the future of currency, but what is clear is that the value of Bitcoin has recovered much quicker than that of stock options. Whether it is advisable to invest in Bitcoin remains to be seen.
The pandemic has uprooted so many aspects of life. Everything from businesses to schools, and even stock markets have been adversely affected by the onslaught of COVID-19. As we endure these uncertain times, people need to find other ways to secure their futures.