The Covid-19(novel coronavirus) pandemic has the worlds population going online. While most companies have not coped well. There are many corporations that have seen an increase in their stock prices due to the nature of their business. Online grocers, video streaming, social media, file sharing, and generally speaking companies who only have an online presence are thriving. As world economies begin to crash people are looking for safe havens. Bitcoin is supposed to be a safe haven during recessions. It was subsequently created right after the financial crisis of 2008. One of the reasons for the creation of Bitcoin was for a safe haven during times of economic recession. A new financial system that does not need banks, governments, or international currenices. So why hasn’t the price sky rocketed.
What about Bitcoin
At first Bitcoin followed the stock market and plummeted over 50% but has now almost recovered to where it was previously before the big drop on March 12, 2020 where it hit 3600. Amidst this crisis it is too early to tell what will happen with the price of Bitcoin. The digital asset is suppose to be a safe haven however what happened on March 12, states otherwise. With the halvening looming around the corner along with a prediction of a global economic crisis it is difficult to grasp which way the price will go.
What is happening around the globe
Some countries such as China have taken an extreme approach to the Covid-19 pandemic. Some banks in China have been literally destroying their cash. Others have opted to thoroughly disinfect it with spray and ultraviolet lighting for weeks at a time. China has also announced amidst this pandemic that their digital currency is almost ready.
The U.S. is reviewing whether a digital version of the U.S. dollar should be available to people for crisis benefits instead of the traditional paper dollar. Earlier this year a bill with proposals of a digital dollar was presented. However the digital dollar part has since disappeared. A new bill is undergoing review which is now demanding a digital dollar. Americans will have the ability to sign up for a digital dollar wallet by January 2021. These digital wallets will be a public service and will be available at banks and post offices as well.
Some individuals may think this is a conspiracy theory. The timing seems perfect. A global pandemic occurs resulting in an economic crash. This allows the economy to reset as millions of people losing their jobs, savings, as well as their investments go to nothing.
A digital dollar announcement is made days after the pandemic becomes a reality in the U.S. Globally central banks are working on digital sovereign currencies. This can be all coincidential but who really knows.
What this means for cryptocurrencies
This can be good and bad for cryptocurrencies. The governments can gain mass adoption of their digital currencies easily by issuing digital wallets. If the wallets have the ability to purchase Bitcoin in them this is a leap forward in adoption. At the same time this is also a step back in privacy and also a step back for stable coins.
At the same time these bills are passed cryptocurrencies deemed securities which is 99% of them will have a difficult time surviving as the laws surrounding digital securities will become harsher. The economic crisis will wipe out many projects as well. These projects need funding to keep moving forward and paying staff. If the crisis continues development will eventually come to a hault. Most of these projects do not have a viable working product or service. Their only means of survival is funding and the sale of their digital asset.
This can be done on online exchanges at the moment but only on the exchanges that are located in countries that for the time being have laws in place to protect these exchanges. What happens when digital sovereign currencies are introduced in these countries. Although countries may embrace Bitcoin and a few other cryptocurrencies as it maybe too late to stop the movement. However they may want to stop a competing financial system that holds unregulated securities on a platform that literally can be used to launder money, that list coins that are scams, all the while the price of these coins can be manipulated for a profit to the creators of these cryptocurrencies and exchanges.
Regulation will happen and it will not look good for unregulated online exchanges. Thus we will have digital wallets holding traceable sovereign digital currencies. If they are able to hold Bitcoin, then Bitcoin will no longer be anonymous for users who store Bitcoin in their digital dollar wallets.
It is hard to predict what’s in store for Bitcoin. The next couple of years will be crucial in terms of cryptocurrencies and digital asset adoption. However does this mean the price of Bitcoin will rise? Not necessarily. Adoption should bring the price higher but we are amidst a global economic crisis and viral pandemic. It is too early to tell what the future holds for Bitcoin.
This article is not intended to be financial advice. All statements made are an opinion and should not be considered or used for the purpose of anything other than an opinion.