The COVID 19 pandemic hit the world with its sudden approach and collapsed much of the world’s current financial infrastructure. Every industrial sector was affected by the internationally declared lockdown.
Every industry was facing a financial crisis. Even the cypto-trade was not out of the loop. Even after being a decentralized currency, cryptocurrency was not able to safeguard itself from the financial crisis. When the traders and investors saw that the world’s financial standing is collapsing, they felt threatened with potential excess loss. This made them liquefy all their digital assets, including crypto assets. This caused a scarcity of crypto coins in the market.
How has COVID-19 Outbreak Affected the Cryptocurrency Market?
Earlier, there was no correlation between the cryptocurrencies and equities. But after the Pandemic, when the price evaluation of bitcoin went below $4,000, the S&P 500 saw a sudden pitfall drop. The reason for this to be happening at the same time was because when the investor and traders saw how the market was deteriorating, they felt threatened and made decisions to sell their digital assets to reduce the accrued loss.
Though the price of Bitcoin has now reached $10,000, it is still time for the Bitcoin cryptocurrency to reach new heights. However, there is a chance we can hope for the cryptocurrency and Bitcoin to see a higher price evaluation. There are some crypto-trade veterans that believe that the price of the cryptocurrency might skyrocket in 2021.
Bitcoin has become a haven for the investors
In the times of lockdown, every fiat currency has failed to perform. Whereas even after taking some damage, cryptocurrency was able to achieve some gain. After the lockdown period was over, it was cryptocurrency that recovered faster than any other asset. This has made the traders believe that with considerable effort and regulations, cryptocurrency can become a haven for them.
However, there are still some factors that are restricting cryptocurrency from becoming a haven for investors. Price evaluation of cryptocurrency depends on the volume of the trade. This is more than enough to conclude that cryptocurrency still lacks to be called a heaven for the traders and investors.
Is Bitcoin a Highly Liquid Asset Than Equities?
There has been a misunderstanding going on in the market. There are some people who are just investing in cryptocurrency because they think that liquefying cryptocurrency is simple, but it depends from country to country. Many nations have legalized the use of cryptocurrency. In that case, cryptocurrency is highly liquid; however, what about the countries that have not accepted the cryptocurrencies? In those countries, the statement of Cryptocurrency being highly liquid turns out to be false.
Let’s say you are being offered two options, first is a Bitcoin, and the other is a part of XYZ company. Which one will you choose? Of course, it will be the company’s shares. The reason for doing that is that you will be able to liquidity from anywhere in the world.
What the Future Has in Store for Cryptocurrencies
Coronavirus has left a considerable dent in the cryptocurrency market just like all financial markets. The cryptocurrency was already facing a significant issue of regulation, liquefication, fighting against scams, and then COVID-19 added a new worry to the list.
After the lockdown is completely over and the financial health of markets starts coming back to its initial state, we might find dramatic changes in the market. We may see that the regulation of the cryptocurrency becomes common.
You might also find several companies surfacing up who provide crypto-trade services. With how it has performed in the past couple of months in the crisis, we can say that cryptocurrency has come a bit closer to being a mainstream asset.
Final Words
With all the current events, we think it is high time for the government to jump in the cryptocurrency matter and allow the cryptocurrency to be a part of the legal transaction network. Not only is the government responsible for the smooth regulation of the cryptocurrency, but it is also you who play an essential role in making that possible. If you haven’t started with the crypto trade, then this might be the best chance for you. Just check here, register with your ID, and place your first trade.