Friday, August 12, 2022
Friday, August 12, 2022
Home Bitcoin Cryptocurrency and Covid-19 – A Look at the Latest Developments

Cryptocurrency and Covid-19 – A Look at the Latest Developments

by Media Pal
0 comment

It’s fair to say that Bitcoin has had something of a chequered history, from its vulnerability to cyber-theft and lack of environmental credentials to incredible price volatility.

However, some of these challenges have been overcome over the course of the last few years, while the diversification of the cryptocurrency market and the fact that Bitcoin has achieved a market capitalisation of around $117.81 billion have helped to increase the global appeal of various tokens. 

The value of cryptocurrency has also taken an unexpected turn in the wake of the coronavirus pandemic, while demand and retail use has also soared. But why is this the case, and will this trend be sustained in the future?

How has Crypto Performed During the Covid-19 Outbreak?

As we’ve already said, cryptocurrency has seen a huge increase in demand and value during the Covid-19 pandemic, with the FinTech platform 2gether measuring a staggering 236% increase in retain crypto transactions in recent times.

During the same period, the poster-boy Bitcoin has also grown by an estimated 22% week-on-week, while basic crypto purchases accounted for around 75% of all trading operations on the aforementioned 2gether platform.

These make for impressive statistics, even if a select few of the leading cryptocurrency tokens dominated the transactions overall. More specifically, 63% of all trading operations were completed using Bitcoin, while 27% featured the increasingly popular (and relatively stable) Ethereum token.

What’s most interesting is that Bitcoin has continued to outperform gold during the coronavirus pandemic, and over the course of the last 12 months overall.

During this period, gold has increased consistently and by 14%, while Bitcoin has seen its value soar by a whopping 70%. During the past week alone, gold has actually declined by 4%, while Bitcoin is up by 22% overall.

Why are Cryptocurrencies Growing as the Global Economy Crashes?

When you consider these statistics alongside the controversial history of Bitcoin and the opposition that cryptocurrency has faced in regions such as China, it’s hard to understand how such tokens are outperforming gold in the current climate.

After all, gold is widely considered to be a safe-haven during periods of austerity and economic tumult, but there are signs that digital currencies may offer even greater insulation in the wake of the current crisis.

The reason for this may be relatively simple; as most cryptocurrencies (apart from selected stablecoins) aren’t linked to fiat currencies and therefore impervious to forex market shifts and diminishing base interest rates.

On a similar note, cryptocurrencies are also largely immune to a host of macroeconomic factors, which means that they’re less malleable to the impact of economic decline. So, as investors looks to adopt an increasingly risk-averse approach and sell assets for cash, crypto is fast-emerging as a digital ‘safe-haven’ to hedge hard-earned capital.

The question that remains is whether this is a long-term term trend and cryptocurrencies are genuinely immune to the virus, or simply a temporary turn of events that holds minimal meaning for investors.

You may also like

%d bloggers like this: