How Coronavirus Crisis Affects Cryptocurrencies

May 15, 2020

Earlier in March, the whole world was surprised to hear that the coronavirus is spreading in so many countries all around and the World Health Organization announced that we are in a state of a pandemic. The first person infected with coronavirus was registered last year in China, and today in May 2024 we count more than 4.3 million confirmed cases, with 1.5 million recovered and less than 300,000 deaths.

This crisis caused so many businesses and investments to fail, reflecting on the global economy and general public health condition. Many companies fired some of their employees because they were unable to pay the salaries. The whole damage is huge, but hopefully, the world will soon recover from this pandemic, but no one knows will it leave lifetime health problems to those who recovered.

But, will the industry recover soon? Will the situation be better for the financial sector, including the crypto one? How this crisis affected cryptocurrencies? Did the investors lose too much money because of the pandemic? Is it worth keeping your crypto savings or you need to exchange them immediately? We will try to answer some of these questions in this article.

Crypto money in a time of the pandemic

As we already know, cryptocurrencies are pretty risky, because no one can ever know how their price will change during the time. But, we can say that all of the most popular currencies, including Bitcoin, Litecoin, Ethereum, and many others are dropping, but they are not out. Investors can still invest in crypto coins and wait for the right time to trade them using platforms like Marketmaster. We can’t predict how the crypto situation will be in two or three months, but we can hope it will get better and the prices will reach a higher peak.

It’s interesting that in March this year, Europeans voted in a poll, believing cryptos will still exist in 10 and more years. The results were used to show that the Crypto-Confidence Index is growing, even in a time of crisis. For example, most of the people in Italy (about 72% of them), one of the most affected countries, believe that Bitcoins and other currencies have big longevity. Knowing that March was a month when the crisis took the whole world, it’s surprising how the Crypto-Confidence Index increased by about 3% compared to 2019. Also, according to the same poll, many Italians believed that cryptos will one day become mainstream currencies, that we will use to buy things we need to survive, or paying for life-saving services.

Is Bitcoin still a safe haven between the fans?

The new coronavirus will teach us not to create “idols” with something that is not as stable as they think. Cryptocurrencies are affected by the crisis as all the other financial assets. Their price dropped and it has linear ups and downs all the time. Many Bitcoin enthusiasts will try to assure you of their safety and stability. But, we can see some fluctuations even on the crypto stocks that show us that the crypto market is not much different than the regular market and it can be affected by the crisis a lot.

Many people don’t have enough money to invest in this modern-time crypto gold. Those who already have some pile of digital coins in their e-wallets decide not to trade them until they are sure the situation is getting better for their savings.

What is the gold for the global finance sector, the same are Bitcoins for digital finances. Many things depend on their rates, including the rates for the other cryptocurrencies. The crypto enthusiasts believe it’s smart to keep the digital savings in Bitcoins because they consider it as a crypto asset of the future. But, can we still believe that Bitcoin is a safe haven for the crypto market even in a time of corona crisis? We can’t be 100% sure, but the time will show if investors were right or wrong about this.

The risk of investing in crypto coins during the pandemic

Even though cryptocurrencies are different than the standard ones, they faced really hard times during the coronavirus crisis. They are not central regulated, and that makes them vulnerable because the easing measures don’t apply to them. Also, the stagnation can make the crypto world vulnerable to hackers and scams and the investors and traders need to use only trusted and verified trading platforms, or wait for the crisis to end. The whole situation is so uncertain because of the COVID-19 outbreak, so we need to wait to see how everything will work out later this year, including the crypto market.

Can this situation last longer than we expect?

This corona mutation is new and different from previously known coronaviruses. The disease it causes is named COVID-19 (Coronavirus disease 19) and it may cause a wide range of symptoms, beginning from the mild ones to the extremely big damages that are the reason why so many people died. It begins with a higher body temperature and dry cough. As the disease progress, it causes heavy breathing, fatigue, tiredness, and pains in the whole body. In extreme cases, the patient ends on respiratory support, but sadly, in this phase, the chances of surviving are low. Many coronavirus-infected patients die because of the blood clots in the lungs.

We expect that everything will be back to normal soon, but the doctors still need to do deeper researches so we can know if the virus will go away after the last patient is cured, or it will stay among us causing milder respiratory diseases and improving the collective immunity. It’s too early to tell. We will know all of this when there will be a hope that the crisis came to its end. Until then, we need to be respectful of the protection policies our governments provide to us, so we can be sure no one will be infected because of people’s ignorance.

And after that, we will be able to clearly see how the crisis affected the global market, including the cryptocurrencies as an independent financial department.

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