The coronavirus pandemic has caused major turbulence in global stock markets, and almost all asset classes have suffered losses due to the sharp sell-offs in the past few days. In terms of market capitalization, the same is true for Bitcoin, the world’s largest cryptocurrency, and its price has fallen sharply in the past few weeks.
Cryptocurrencies have been showing positive momentum from 2020, and have soared at an encouraging rate. However, in the past few weeks, It has fallen by 50%.
Hedging the recession?
One of the most important things to remember at this time is that Bitcoin generally performs well when the stock market is turbulent. Currently, due to the coronavirus pandemic, the stock market has completely collapsed. So far, the price of Bitcoin has not actually risen.
Considering the fact that BTC is usually seen as a defense against market turmoil, this surprises many people. Despite the current panic, the reason why traders and investors have not sold shares on Bitcoin may be due to possible further stimulus.
That being said, large-scale government-supported stimulus measures may also cause the dollar to depreciate, which may make Bitcoin a “store of value”. After all, this is the purpose of creating Bitcoin, and the conditions can be created slowly but surely, May cause a rally In cryptocurrency.
Last but not least, the coronavirus pandemic may lead to a major reset in which digital and contactless payment systems become the norm throughout the world. In this case, Bitcoin may also become a winner. However, investors may wait for some time before cryptocurrencies can meet their main use cases (if any).
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