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Bitcoin Copping with The Pandemic

Pandemic

August 12, 2020 | 

716 Views | 

JOHN K MWANIKI | 

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The coronavirus pandemic has been massive in the world. Almost all sectors have stagnated. After prolonged periods, businesses are starting to pick up. Still, the effects are just not going away. Businesses are just not the same. Governments have put in place several resumption guidelines.

Of all the sectors, the crypto economy seems to be the least negatively affected. While other businesses were going down, Bitcoin seemed to be booming. It has increased ever since to trade some of the highest. And from the look of things, there is more to come. 

Here is how Bitcoin has coped with the pandemic;

Taking Advantage of the Declining Dollar

Crypto and the fiat currency have always seemed to be worlds apart. That the happenings in one don't affect the other. However, for now, it seems a fallacy. Bitcoin has its value tied to the US dollar.

The stronger the dollar is, the more Bitcoin you can purchase. Of late, that has not been the case. The US economy is one of the most affected by the Coronavirus. The spread of the pandemic has affected the operations of the dollar. It's the government, through the central bank, that is providing stimulus packages to businesses for them to stay afloat.

After an extended period of a slow economy, the dollar is fast, hitting the low values. It has so far experienced devaluation similar to that of the 2008 economic crash. The dollar has sustained a decline for the past three months.

Meaning there is a likelihood of a further reduction in value. Bitcoin, in the same period, has been increasing in value.

The crypto has rallied for months to trade some of the highest. It has even hit the $13k mark in recent times. Most investors believe this is as a result of the dollar. They believe that instead of Bitcoin improving, it's reacting to the declining dollar.

The effects of the dollar are visible in more than just Bitcoin. Other commodities like gold have also shot in value in recent times. Meaning the improvements on Bitcoin is not anything unique to crypto. The decline of the dollar has been too much such that some banks are starting to reevaluate its use as a reserve currency. 

Already several investors are predicting Bitcoin to replace the US dollar as the people's reserve currency. They are basing their assessments on the declining accessibility to legit dollars.

Bitcoin is also quite accessible as most people own smartphones more than they do bank accounts. Bitcoin will be the financial solution to the growing young generation and the unbanked. 

The main reason for the more significant decline is the widespread Coronavirus. The US is one of the most affected countries in the world from the pandemic. It has some of the highest numbers in infections and deaths from the virus. This has severely affected the economy.

Improving value due to Increased Demand

The start of the pandemic painted a dark future for the crypto world. For a long time, it had been touted as a safe haven. Most investors had considered it in the same league as gold. And there was no better time to prove this than in a pandemic like the Coronavirus.

At the start, it all seemed like it was succumbing to the pressure. It was fast declining in the face of a declining economy. The decline was massive, with some traders off-loading their assets in Bitcoin. It reached the lowest at $3k.

Yet, that was the lowest it was ever going to reach. It immediately started a bull run that has lasted for the past four months. The coin has experienced massive gains in the process. It passed the resistance levels that have otherwise been an issue before. Such gains can only come with increasing demand.

The demand for Bitcoin has increased in recent times as investors are looking to gain a piece. Now that they are sure it's a safe haven, everyone wants to have a piece. Most of the people are working on the premises of Fear of Missing Out (FOMO). 

Like any asset, Bitcoin works on laws of demand and supply. The more the demand, the lesser the supply hence higher values. Which also explains the sustained rise in value. 

The demand for the coin has also spread to its other subsidiary markets. There has been a steady rise in the uptake of Bitcoin Futures in recent times. The rise of the Bitcoin futures contracts shows an increased activity from accredited and institutional investors. It is more of a show of confidence in the coin.

Most of the investors believe the increase will go on for some time. Max Keiser, Wall Street veteran, believes the coin will hit $28k by the end of the year. After which it will undergo a market correction. 

Becoming Mainstream

To add to the increasing value, Bitcoin is fast becoming mainstream. After earlier rejection by most countries, they are starting to recognize it as a viable currency. Several representatives in the US already want Bitcoin introduced in the tax systems.

These changes come in the wake of various regulations. The Financial Action Task Force (FATF) has put in place several anti-money laundering regulations. Treating the coin like any other fiat currency makes it more secure. Thus, several countries are willing to adopt. 

The pandemic has also accelerated the move to a digital world. With most people working online, the digital economy has improved. So far, Bitcoin provides the right framework for digital operations. The traditional banking system is also now warming up to Bitcoin. 

After earlier on rejecting the coin, the traditional banking is now supportive of the coin. This follows the introduction of several crypto exchanges. There has also been an influx of crypto payment processors.

Bottom Line 

While the pandemic has been rough on the economy, Bitcoin is not the worst hit. It has instead improved more than ever. The coin has gained trust as a safe haven. It has continually grown in value and is headed for mainstream adoption. 

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COMMENTS (1)

batholomew brown  batholomew brown . I’m a bitcoin trader and the time I’m writing this blog I can’t find a single review about many bitcoin trading signal services and companies. I have lost lots of money testing them for over an year. I don’t want you to be scammed too.   11 months ago from Canada

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