Crypto Boosted After Crisis

Judy Rubio

Covid19 has affected all areas of our life, including finances. While government officials and regular people are worried about the stability of fiat currencies after issuing trillions of dollars in stimulus checks, let’s consider how post-coronavirus world may be beneficial for cryptocurrencies.

Effects of economical crisis and possible inflation

Covid19 stopped the normal functioning of businesses worldwide, consequentially costing millions of people their job and life savings. Governments worldwide have no choice but to consider stimulus checks and other forms of helping people get by during these tough times. It is no wonder that people thought that inflation is the next possible outcome. The panic about debasing the main fiat currencies led people to seek new safe-havens. Cryptocurrency seems like the next logical step for a lot of analysts and financial experts. On twitter some crypto enthusiasts even want inflation to happen as soon as possible for cryptocurrency to surge to new heights.

Over the past month, the global stock market has already lost $ 20 trillion. If we correlate this amount with a total money supply of 80 trillion, we can easily calculate that inflation of the dollar was about 25%. But since the global financial system is designed so that the dollar printing press is located in only one country in the world, taking into account the time lag, inflation with a delay of a month or two will be smoothly spread across the entire world economy. With this in mind, market participants will begin to pay more and more attention to those financial assets that are not exposed to inflation risk. Bitcoin is one of the best candidates for this role. Its essence will serve as a defense against the devaluation of fiat currencies. We also note that if the dollar becomes cheaper, then cryptocurrencies relative to it will rise in price. In addition, Bitcoin cannot go bankrupt - unlike companies, especially from the tourism sector, the airline industry or retail. Nevertheless, it must be taken into account that now people have a priority in survival. Therefore, many can begin to withdraw money from cryptocurrencies, which will inevitably lead to a drop in rates.

Political crisis as a reason to invest in crypto

It is safe to say that 2020 is full of important events. In the USA there are mass protests against police brutality. Many crypto analysts think that fiat and traditional financial system is one of the tools of controlling masses. Bitcoin was created to escape centralized pressure from the banks and government. People believe that political crisis will prove the importance of crypto.

Mass demonstrations in the United States began after a policeman killed African-American George Floyd in detention. People took to the streets with demands for justice and an end to police brutality against black people.

Author Isaiah Jackson noted that the main enemy of African Americans is the traditional financial system. He said that when the economy is broken, no matter how hard you try, you will still be thrown into areas with increased police control. Then everything goes down begin and the police begin to kill black people, which trigger the domino effect.

As the main problems of the economy, Jackson called the lack of work for 40 million US residents and the uncontrolled press of the Fed's fiat money. He added that people began to realize who their main enemy was. What strategy can help our society in the future? He thinks that people have just realized that bitcoin can be a solution. 

Despite all this, the author noted a low demand for bitcoin among the black US population. In his opinion, less than 1% of people actively use cryptocurrency, while about 10% rarely do it.

Recall that last year, the price of bitcoin at LocalBitcoins in Hong Kong exceeded the average market by $ 300 amid mass protests and reports of movements of the PRC troops.

Jackson also called the purchase of Bitcoin the simplest form of peaceful protest.

Risk of catching virus because of using fiat money

 

Some of the reasons to switch to digital currency may be not as obvious. For example, using fiat money actually gives you more exposure to covid19. A lot of shops and even governmental bodies have switched completely to cashless transactions. But the Bank for international settlements 2020

What comes next?

The first cryptocurrency appeared and developed in the period between global crises. Bitcoin was created as an alternative to a centralized financial system. However, despite the growth, for eleven years the cryptocurrency market has not demonstrated global adoption and implementation. The key advantages of cryptocurrencies - decentralization and anonymity - are also gradually being questioned. The industry is still full of scammers; market regulation is not fully developed yet. Cryptocurrencies are still a risky asset, attracting speculators with their volatility. However, traditional markets over the past month have shown no less, if not more, volatility. Investors are confused.

If the systematic growth of the cryptocurrency market, without sharp jumps, continues against the backdrop of a decline in stock markets, then it will give investors confidence. It is precisely such conclusions that suggest themselves: the cryptocurrency market is now a field for experimentation, and so far before making large-scale investments you need to carefully weight all pros and cons.

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