In a span of three months, the coronavirus became a global pandemic. Even those who didn’t get infected, saw their lives change dramatically. Some even go as far to say that the battle versus coronavirus is World War III. It may not be a war but the entire situation sure made an impact on the world economy like one. Many people are wondering how this is going to impact the crypto market. Some say it may even be dead. But is this really the case? Read on to find out.
Crypto is replacing gold
First of all, if you’ve invested in digital currencies, you can relax. They’re going nowhere. In fact, they may even get stronger after the pandemic is over. The best way to view this is to compare crypto with gold.
For centuries, people bought gold and saw it as the safest tool for storing wealth. While its value didn’t always change when currencies started going down, there were crisis situations when this wasn’t true. For example, during the Great Depression, Franklin D. Roosevelt banned private gold ownerships and the price of gold was fixed at $35.
Crypto and gold have been competing for quite some time and once the pandemic is over, crypto will be winning. Why? Well, the most important reason is logistics. When individuals and businesses started buying gold when the pandemic started, they faced problems with borders and transportations. This led to gold falling along with global stocks and them losing money during the pandemic. On the other hand, those who decided to invest in crypto only had to make a click of a button. This is why experts are starting to see crypto as the new king.
The prices are going down as expected
As we said earlier, COVID-19 is impacting economics more than anything that has happened in the last few decades. There’s no need to say that this means we’ll see things losing value. And yes, this includes digital currencies.
Experts expected huge losses, mostly because China and South Korea own more than 70 percent of the mining power of bitcoins and some other cryptocurrencies. That’s why the fear is natural. Luckily, the nature of the industry is such that you can do some work from home. Therefore, mining didn’t stop completely and the value didn’t go down drastically. At the end of March, the overall drop was about 15 percent and this number may increase. However, all prices are moving in the same motion and this doesn’t threaten to endanger your crypto investments.
The pandemic has already impacted economics and it will do so even more in the next few months, maybe even years. Such changes in value are expected and unfortunately, they’re something we’ll just have to live with.
Some digital currencies will do better than others
With COVID-19 impacting crypto on so many levels, it’s obvious that we’ll see different results with different digital currencies. It all depends on the approach companies behind them decide to take during the pandemic. This may not necessarily be good news for digital currency investors, as it requires them to do more research before putting their money into crypto.
Investors need to know exactly which currencies will outperform other currencies and are safe to invest in. Luckily, the internet is full of free resources and you can do research there. If you take a look around the web, you’ll see that the digital currency called Monero is doing great. In fact, it recorded an impressive 23.7 jump. On the other hand, you’ll also see that the release of Facebook’s Libra will probably be moved to 2021.
Another currency that’s safe to invest at the moment is Litecoin. This currency is currently ranked sixth in terms of market cap and it’s exactly what investors are looking for. If you don’t know how to buy this currency in your country, know seems to be the perfect time to learn more about it. In case you need tips on how to buy Litecoin in the UK, you can find all the info you need on sites like AskTraders.
Banks will finally hold digital currencies
If you need proof that crypto will remain a huge part of our lives, just look banks around the world. Historically, regulators have been very cautious about banks holding digital currencies such as Bitcoin. This has even been the case in Germany where more than 40 banks tried to obtain crypto custodian licenses.
The coronavirus pandemic has caused numerous changes in the baking world amongst everything else. One of the biggest changes we’ll get to see is banks reexamining their reliance on complex mathematics. This is mostly because such an approach doesn’t take into account disasters such as global pandemics. As a result, the magic word “scarcity” will make a huge comeback.
Banks will search for scarce assets that provide long-term stability. We already talked about gold and it’s obvious why this asset isn’t their number one target. Instead, most banks will turn to crypto or the “digital gold” as some call it. This will bring stability to their balance sheets and change the way regulators view digital currencies for good.
The bottom line
There’s no need to panic about digital currencies during the coronavirus. Sure, their value may go down but will the value of everything else. Such drops are expected and they shouldn’t stop you from investing in crypto. Find the right currencies to put your money into and you’ll do fine.
