Cryptocurrencies in the era of COVID-19
By Yasmin Chamchoun
The coronavirus outbreak, which (at the time of writing) has seen more than 2 million reported cases and over 150,000 deaths globally, has caused turmoil across the world. With international economies suffering, stock markets plummeting and oil prices dropping, cryptocurrencies are no different and have also been hit hard by the misfortunes of the pandemic.
Back in early February, Bitcoin was valued at just over $10,000, it then dropped to a shocking $4000 on the 13th February 2020. Bitcoin Cash, Ethereum, XRP also suffered similar fates. The spark in cryptocurrency selling and rapid drop in crypto value in a short period of time has left many people sceptical about whether or not cryptocurrencies are a safe haven during economically difficult times and whether in fact fiat currency maybe the better alternative.
Richard Burton a once keen crypto investor was one of many who lost confidence in cryptocurrencies during this pandemic. He shared that, “when the US treasury went vertical 5 weeks ago I got spooked and sold everything I could. Now I am investing it in private start–ups because I don’t understand public markets.”
On the other hand, many peoples trust in cryptocurrencies still remains positive. Some may in fact argue that the pandemic is actually a good opportunity to invest as they can benefit from the dip by capitalizing on the low price.
Jake Greenbaum, a blockchain entrepreneur and the co-founder of Pocket Node and ANON believes that this is the ideal time to invest. He said: “Personally I do believe it is a great time to invest in Bitcoin and blockchain technologies. Money in my opinion will be deemed “contaminated” resulting in digital dollars from all countries. Once that occurs it will be do you trust BTC or govts? Covid will be the tipping point for the shift to digital currencies.”
Bitcoin price over the first three months of 2020
Similar views are shared by Lea Thompson, CEO of Girl Gone Crypto and video producer who focuses on developing projects to increase the adoption of blockchain technologies. She trusts that “times like these are the exact conditions that bitcoin is designed to thrive in. The fact that we are currently up for the year is impressive considering that very few asset classes can say that right now. I think one positive thing that has come from this global pandemic is that people are starting to ask questions and learn about our monetary policy. It might have taken printing trillions of dollars to catch their attention – but at least they are starting to learn the difference between soft and hard money and why a fixed supply currency like bitcoin is a smart alternative to fiat currency.”
Rares S. Dumitrescu a crypto enthusiast and IT Architect also shared his outlook on this matter. “I believe that if the pandemic would have happened 1-2 years, further along, the crashes and price swings we have experienced might have been less wild. The majority of crypto companies that are alive right now are coming fresh out of a 2 year bear market. If they survived that, they are surviving COVID-19 just fine. The majority of them are working remotely already so it’s little to no impact to business operations.
Looking around the world, I see countries that managed to beat COVID-19 helping others in need as soon as they have their own things under control. This makes me bullish because it means faith in humanity is on its way to being restored and therefore business, as usual, is not very far along. The market is currently down 30-35% from when it dropped. It’s a decent moment as any to take some bets if you believe that crypto has valuable things to offer,” Rares continued.
Investment opportunities and dangers for cryptocurrencies
As expected with COVID–19 came an increased number of reported cryptocurrency scams worldwide. For example, in the UK, there have been reports of scammers falsely claiming that for a specified Bitcoin payment they can provide individuals with records on locals infected with coronavirus.
Similar, scams have been reported in China, where professional con artists are disguising themselves as being part of the ‘World Olympic Sports Foundation’ and untruly claiming to use blockchain technology to invest in products related to the Tokyo Olympics, which has since been postponed to 2021. Ultimately, with scams like these on the rise, many people may have a tainted perception of cryptocurrencies, making them wary of investing in them.
Ethereum price from November 2019 to April 2020
Nonetheless, since the dip, the market has since showed steady growth, with Bitcoin price currently standing at around $7000 (at the time of writing). This provides some reassurance that cryptocurrencies and other blockchain technologies will recover from this pandemic undefeated. It is important to note that if you choose to invest during the current times, or during any other times for that matter, that it is vital to have all the critical knowledge on the crypto market as well as have done all the relevant research.
Lea Thompson who also runs a YouTube channel Girl Gone Crypto which reviews crypto projects, highlights the importance of grasping the foundations of the crypto market before investing. She said: “I think it’s really important that people understand the underlying principles of what they are investing in. Do they understand why a certain asset class is valuable and what the factors are that will contribute to either its growth or decline? I personally choose to invest in hard, sound currencies like bitcoin – but people should do their own research so they can feel more confident with their investing decisions.”
Undeniably, many envision the prospect of embracing a complete digital transformation and blockchain revolution in businesses and economies across the world, but whether that will be in the foreseeable future is something that remains uncertain.