“Bitcoin will continue to grow”. How the second wave of COVID-19 will affect the markets?

switchere

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Jul 28, 2020
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The situation with the spread of coronavirus is worsening, the number of diseases is growing, and restrictive measures are increasing. In March, this led to a decline in financial markets and increased demand for cryptocurrencies. Experts are confident that now everything will be different.

COVID-19 impact on the interest in cryptocurrencies

Transfer of people to remote work due to the pandemic, as well as in spring, will have a positive impact on the number of new clients of the Crypto Exchanges. This shows that the clients of the platforms are very active.

There are very different forecasts for activity on decentralized trading floors where DeFi tokens are traded. This sector will continue to grow in the coming months, and thanks to the integration of multiple services among each other and the ability to repeatedly re-pledge loans received under the crypto-security, this area offers interesting opportunities for profitability and risk hedging in the conditions of instability in traditional financial markets.

Stock market and Bitcoin vs Coronavirus

In March, there was panic on the financial markets against the background of the imposition of restrictions. Against the backdrop of a fall in the U.S. stock indices, the Bitcoin price fell by 50% to $3800. Now, if the pandemic in the U.S., Europe and, for example, China starts to gain momentum, it will inevitably affect the markets again.
Now the S&P index is overheated: the spread between companies’ returns and their capitalization is huge, it is a real financial bubble. Therefore, in case of a sudden worsening of the situation with the pandemic, a downward correction will inevitably occur. How deep it will be will largely determine U.S. monetary policy, new liquidity injections will support the market. However, it will not continue forever.

It is difficult to predict the behavior of Bitcoin in case of a stock market crash. The first cryptocurrency may both fall with it and go up. Fundamentally, the second scenario has more prerequisites, as BTC has already become “digital gold” and should play the role of an asset shelter.

There will be no hard quarantine (as it was in spring), so we should not wait for the same sharp decline in financial markets, although the decline will occur. He also noted that investors perceive bitcoin more as a protective asset, so its rate should continue to grow.

“It is not for nothing that institutional investors are increasingly investing in the cryptocurrency market — digital finance acts as a “safe haven” in times of instability,” the expert concluded.

Bitcoin is now traded at $10,687. In September, the first cryptocurrency several times unsuccessfully tried to overcome the $11,000 level. In August, the asset set its annual maximum value at $12,400, showing a 277% growth over 5 months.
 

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