Every monetary product has been influenced by the pandemic, including the stock market, commodities market, and cryptocurrency market. Price corrections are a fact of life in any asset class, and bitcoin is no exception. If you look at the year-over-year growth of Bitcoin values, you’ll notice that it’s been consistent. The last year has been a game-changer for cryptocurrencies and blockchain technology. Cryptocurrencies have proven to be extraordinarily durable in the face of such volatility and economic collapses. Let’s see how the Covid-19 pandemic affected the cryptocurrency market.
The most popular cryptocurrency, Bitcoin, has become a highly valuable asset in recent years. Ethereum, Ripple, Dogecoin, and other cryptocurrencies have also performed nicely. The crypto market is still in the midst of its longest bull run ever. We might be cautiously optimistic that the coronavirus’s end is in sight, with the vaccination system operating at full speed and huge social efforts to combat it.
Regulatory actions involving cryptocurrency
Several emerging economies have already begun to incorporate Bitcoin and other cryptocurrencies into their economies. Costa Rica has stated that employees may be paid lawfully in cryptocurrency. As a result, the country’s adoption of the technology skyrocketed.The Philippines’ central bank licensed nearly sixteen cryptocurrency exchanges last year, putting the country at the forefront of Southeast Asia’s expanding technology.
The Indian government has yet to take a position on this new asset class in terms of regulation. Experts think that a lack of regulation in such a potentially lucrative fintech industry could lead to disastrous black market transactions. The Indian cryptocurrency community has been hoping for a favorable regulation governing cryptocurrencies and their transactions. Our finance minister stated emphatically that the government will not shut down all choices related to cryptocurrencies and their technologies. Moreover, several other ministers have stated that there is a good probability that crypto markets will be regulated in India shortly.
Active Growth in Economic Activities
Given that the currency was just introduced a decade earlier, the rate at which it has grown at such a rapid pace is unprecedented. There is already a structure in place, as well as companies built around cryptocurrencies all over the world. Many industrial investors have jumped into cryptocurrencies in search of a haven from the traditional economy’s inflation. Even institutions that earlier refused to discuss cryptocurrency are now setting up shops to offer cryptocurrency services to their customers.
Digital transformation of central banks
People are more likely than ever before to use digital payment methods as a result of the pandemic.As a result of this approach in payment patterns, central banks throughout the world are considering introducing Central Bank Digital Currencies (CDBCs) as a digital economy alternative payment mechanism.
CBDCs, unlike cryptos, are a digitized version of a country’s computerized currency that is created, backed, and issued by the government. China continues to be a digital currency leader, and the digital Yuan is currently being tested.
The CBDC movement is not limited to China. According to a survey done by the Bank of International Settlements (BIS) in Switzerland, more than 80% of the 66 institutions examined are conducting their own CBDC experiments. Canada, England, the European Union, Japan, Sweden, Switzerland, and the United States have all released their first CBDC reports.
In addition, the Reserve Bank of India has expressed interest in launching a CDBC for the Indian Rupee. While no official timeline for the launch of digital currency has been set, the Reserve Bank of India is seriously exploring the creation of a sovereign digital currency system.The CBDC aspires to combine the best of both worlds: cryptocurrencies’ safe digital payment mechanism and the conventional system’s centralized and regulated money circulation.
Embracing the Unpredictable
The epidemic has resulted in some surprising winners and losers across a wide range of industries. However, on a national level, it has been practically awful. Many governments are turning on the fiscal stimulus faucets to keep the economy afloat until vaccines can stop the pandemic in its tracks.Interest rates and real returns have dropped as a consequence of global fiscal stimulus. Adding to the instability, many countries’ economic deficits will inevitably influence their national economy, placing the worth of their currencies at risk.
Bitcoin’s status as a speculative investment appears to be less risky in this atmosphere than it would be in more stable times. Bitcoin is being positioned as a hedge against eventual inflation akin to gold, but digital even though there is no centralized management selling it. Although Bitcoin’s capacity to operate as an inflation hedge or an alternative haven currency to the US dollar has yet to be shown, several funds have invested in Bitcoin and other cryptocurrencies with tiny risk holdings for that purpose. More professionals and private investors are anticipated to have followed suit as a result of the recent surge.
Game Changer Over the Years
Although the epidemic, the hunt for actual profits, and a strong desire for safe investments are attributable the most to Bitcoin’s rise, this has come into its own in terms of public acceptance. Bitcoin, which was originally limited to a fervent, tech-savvy user base, may now be used for everyday transactions such as purchasing coffee or shopping online. The number of merchants accepting Bitcoin and other cryptocurrencies is rising steadily. The daily value of a Bitcoin still has a lot of fluctuation, as evidenced by the March low to November high, but that value can now be touched more easily than ever. You can check for a better vision.
As we wait for the COVID problem to fade away, it’s exciting to consider what crypto can do as an asset class and a payment system around the world. It would be absurd to expect that cryptocurrencies will go without another crisis; it will almost probably confront a few of them. The economic upheaval caused by the pandemic, as well as the national bills stacking up to be fulfilled in the future, have helped Bitcoin and cryptocurrency in general. Although Bitcoin is now more well-known than it was five years ago, it remains a risky investment that should be handled with caution by regular investors.