Skip to content

The worst crisis of the century sets the stage for Bitcoin

May 31, 2020

The COVID-19 pandemic has devastated the economies of countries around the world and shows no signs of stopping. The overwhelming response from world governments has been to completely or partially shut down their countries. That saved a lot of lives, but the economic consequences were wild. Only the United States is on the right track to record record unemployment of 30% and an unprecedented 30% drop in gross domestic product. China, the European Union, Japan and the UK are not doing much better.

In these uncertain times, investors are of course nervous. After the massive decline in March and rising unemployment and fear, the stock market has hit new highs amid a pandemic. It appears that the American people and Wall Street live in parallel universes, suggesting that the recent recovery could be little more than a dangerous bubble.

When this sell-off spread to the cryptocurrency world in March and Bitcoin (BTC) subsequently fell to a low $ 3,600, shook the faith of those who preached Bitcoin’s Safe Haven narrative. However, in the weeks since then, Bitcoin has recovered faster than any other asset. If the global macro situation deteriorates, we can see greater downward pressure on Bitcoin prices in the short term. In the meantime, the long-term outlook for BTC could not be more optimistic. Here’s why the worst crisis in a century has set the stage for Bitcoin.

Infinite quantitative expansion

The worst crisis of the century sets the stage for BitcoinThe worst crisis of the century sets the stage for Bitcoin

In addition to closings, another measure that has been taken by the richest nations in particular is to raise money against the coronavirus problem. More than $ 8 trillion has been spent worldwide to address the impact – and we are still in crisis. It becomes clear that $ 8 trillion is not even enough. In order to, How much will it be enough and how sustainable will it be?

Given the drop in GDP, record unemployment and many companies forced to close their doors forever, Unlimited quantitative easing threatens even the richest nations.

The risk of hyperinflation in major world currencies will increase. Although the United States or the United Kingdom are unlikely to experience the same scenarios as developing countries like Venezuela or Argentina, the tireless pressure on money will at least cause currencies as their powers to become poor stores of value. Purchasing will be eroded and savers get a negative return on a bank.

In today’s world, most ordinary people may not think so much about investing now as keeping food on the table. However, wealthy and experienced investors have finally started to recognize the potential of Bitcoin. The notorious macro inverter Paul Tudor Jones recently added Bitcoin to his public portfolio and called him “the fastest horse”. He also said that he bought it as a cover for the inflation he saw when printing money. That sends a strong message.

Aside from the short correlation with the stock market earlier this year, Bitcoin has no correlation with other markets. Risk managers understand the importance of diversifying an investment portfolio, especially in times like these, and many investors are likely to follow Tudor Jones’ example.

In contrast, Bitcoin is becoming scarcer

Almost like to demonstrate the key quality of Bitcoin, halving Bitcoin reduced the block’s reward to miners, which means unlike Fiat Your stock will decrease. It’s such a stark contrast that even skeptics have to pause and think, or at least examine the value of owning a Bitcoin.

BTC’s refuge status appears to be gaining ground again as the $ 10,000 mark is slated to be tested again after halving. Despite the Black Thursday event and all the volatility, it has shown an impressive recovery and still shows 35% annual growth.

After this third halving and the recent euphoria for gold, Bitcoin has more weight as “digital gold” than ever before.. The demand for gold will increase production, but very soon BTC’s inflation rate will be “harder” than that of gold.

In addition to the price, the fundamentals look good. The hash rate has dropped slightly after halving, but is still close to the all-time high. It recovered by itself with zero government incentives or bailouts.

The industry continues to grow

Despite record unemployment, the crypto space has intensified in many companies, particularly stock exchanges, in a wave of attitudes, including octopuses and OKEx. The largest US financial institution, JPMorgan, recently announced that it would open bank accounts for the Gemini and Coinbase exchanges.

Renaissance Technologies, a $ 10 billion cryptocurrency hedge fund, has approved the offer of CME Group’s cash-settled BTC contracts, and the Grayscale Investment Trust recently saw record inflows of proven institutional funds buying Bitcoin.

More eyes are on Bitcoin

Not only have smart money and institutional dollars arrived, but ordinary people (perhaps for the first time) are questioning the value of money. It may not be something you’ve looked at before, but when you see billions of dollars that seem to have been created out of nowhere, you’re wondering how money is created. This clears a veil of government practices and speaks more for Bitcoin.

As Bitcoin continues to prove its value and turns out to be an indispensable element in investor portfolios, more eyes will be focused on it. Many of the people who stay at home will look for more information about him and realize that they have an alternative to the current financial system. Now, more than ever, it’s time for the crypto community to shine by delivering quality educational content.

To this end, OKEx launched a beacon program at the end of this month that is specially tailored to the most affected European region. This will be an opportunity for people affected by the crisis to deal with blockchain technology and crypto space. We hope to inspire and stimulate new careers through the content of OKEx Executive Lectures and mentoring so that people can get out of the crisis well.

COVID-19 – for all the difficulties and deaths that it has caused – It could be Bitcoin’s largest catalyst to date.

The views, thoughts and opinions expressed here are only those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.