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The Impact of Covid-19 to the Crypto Community

Covid-19 to the Crypto Community

June 21, 2020 | 

JOHN K MWANIKI |  0 Comments| 

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Nothing has ever shaken the economy so much in recent years, more than the prevalent Coronavirus. Not even the 2008 economic crash would come any close. The virus has grounded world travel and has seen almost all the sectors go to a standstill.

Being part of the emerging economy, the crypto community has also faced the impact of the virus. Here is a detailed look at the effects of the Covid-19 on crypto:

Crypto-Mining

To understand the effects of Coronavirus on the crypto economy, you must first know how it affects mining. The virus has reduced how much crypto is mined at the moment.

With China and South Korea being the largest miners in the world, it is easy to see the effects, now that they are some of the hardest-hit countries.

With the quarantine and isolation in place, most mining farms failed to produce more coins to the economy, leading to a shortage. The shortage led to declining prices in the early stages of the Covid-19 until the market readjusted.

The Market

Even though the Coronavirus has had an impact on the economy, it has not significantly affected the investor's appetite for the crypto coins. The only time when investors were willing to let go was during the slow run. Still, Bitcoin puts a selling limit to avoid damping. Afterwards, the market corrected, and everything runs normally now.

Bitcoin as a Safe Haven

For a long time, investors have always thought of Bitcoin as a safe asset. They had believed that the coin is free from the effects of the traditional exchange market. It was true until Coronavirus hit. 

A decline in the traditional money markets came with a corresponding sharp drop to the crypto coins. Bitcoin traded at some of its lowest at $3600. After some time it started regaining to also trade at some of its highest of over $10k. 

To explain the changes, investors attribute the reduced mining activities that led to a shortage of coins leading to declining in value. After some time, with fewer coins available, the demand rose. Higher demand increased the value of the currency. Still, some investors consider the rise a bull trap.

Such a sudden run has seen the investors question Bitcoin's functionality as a haven. 

Going Forward

Even though the Coronavirus pandemic is not yet over and the world is just opening up, investors and other team players are looking for the best solutions going forward. The first course of action is to assess the extent of Bitcoin as digital gold.

There is also the need for diversification. Those who trust in the traditional assets have to consider venturing into a bit of the crypto.

While those who invest majorly on single crypto must find other coins. Having multiple assets ensures you are set when one investment goes down due to unforeseen economic changes likes Coronavirus.

Bottom Line

While the Coronavirus has been prevalent in the markets, it has not significantly affected the crypto world. It has mostly shown the need for diverse investments and to question Bitcoin's viability as a haven.

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