Who would have thought that the world situation would change so much in the past twelve months? Recall that last November, „zero patient“ with COVID-19 appeared: according to the Chinese news publication South China Morning Post, on 17 November 2019 doctors found the first coronavirus patient. A few weeks later, entire cities in China were beginning to be quarantined, and a little later similar measures were taken almost all over the world due to the rapid increase in the number of infected people. How did all this affect the cryptov currencies? We are telling you.
Global quarantine had a serious impact on the economy and contributed to a sharp increase in unemployment rates in dozens of countries. But despite everything, the ongoing crisis has also had a positive impact on the world. European conservatism, which has long relied on the traditional financial system, has been questioned as the pandemic has forced Europeans to switch to non-cash payments and crypt currencies.
Journalists from the Cointelegraph news publication gathered the thoughts of the industry’s most famous personalities about the complex relationship between COVID-19 and cryptov currencies. Thanks to them, it will be possible to draw a picture of what is going on and to sum up some sort of interim results.
How did the coronavirus affect Bitcoin?
Here is a quote from Ashish Birl, General Manager of RippleNet.
COVID-19 has exacerbated the inequality between those who do not have normal banking services and has identified gaps in our financial infrastructure. Despite the pandemic, people still need to send money to relatives and friends abroad. As a result, remittances continued to grow in some of the largest corridors. For example, in the US-Mexico corridor, remittances have increased significantly since the beginning of the pandemic: in March 2020, Mexico received $4.02 billion from abroad, a 36 percent increase compared to March 2019.
Indeed, as the burden of cashless settlement systems increased dramatically due to the lockdown, people began to realize how high fees they were charged for normal cross-border transfers. In this situation, many of them turned to working with cryptov currencies. However, in the case of Bitcoin, a transfer of the equivalent of a billion dollars may cost the price of a cup of coffee at an expensive coffee shop.
Then Da Honfei, founder of the Neo project and CEO of Onchain, spoke.
In my opinion, COVID-19 did not have a negative impact on the cryptovoltaic market – in any case, it caused increased demand for innovation and implementation of the blockchain. By identifying the weaknesses of our current paradigm in finance, the Coronavirus also highlighted the urgent need for decentralisation.
In other words, the analyst believes that governments and bankers have failed to cope with the crisis situation, which they, among others, have begun to address by issuing new money. And since not all people approve of such actions, but they cannot influence what is happening – yet the authorities have the exclusive right to issue money – citizens in many countries have really thought about decentralisation. And cryptocurrencies are just such a means, because code and algorithms, not officials, govern the main block projects.
Another interesting point of view from billionaire Tim Draper, a well-known venture capitalist and longtime supporter of Bitcoin.
Many people stuck in their homes have finally taken the time to create their own crypto trader wallet. However, the real impact of the Coronavirus is that the isolation has been devastating for many families. When the government printed 13 trillion dollars to support the economy, these people chose Bitcoin over the weakening national currency.
Indeed, the demand for Bitcoin and its popularity has increased dramatically this year. Accordingly, people have indeed begun to explore alternative investments that are not so dependent on government action. Let us remind you that the correlation – that is, the connection between BTC and classical assets is usually insignificant. Bitcoin and other cryptocurrencies have shown growth more than once while the same gold has fallen.
As a result, experts agree that manipulation of the dollar supply on the international currency market has seriously reduced its purchasing power in just a few months. Moreover, they have undermined the status of the world’s reserve currency – as its own price rises, Bitcoin does indeed look like a more attractive asset for investment.
This means that the conclusions are clear: despite the terrible consequences of the coronavirus pandemic and mass lockdowns, the cryptov currencies have only benefited from this situation. People did not fully appreciate the efforts of officials and decided to withdraw from them. That is why many of the citizens‘ savings have gone into the crypt currency, among others.
This is also proved by the graph of the total capitalisation of the cryptovolta market. In 2020, the indicator almost tripled – from 191 to the current 568 billion dollars. We hope this does not end there.
Here is a graph for clarity.
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