Since the new coronavirus has been officially declared a pandemic, the cryptocurrency market has been flooded with negative opinions about the future credibility of digital assets. As the disease did not escape any industry, including the cryptocurrency market, and brutally broke the myth that Bitcoin is a safe haven option, most cryptocurrency holders have come face to face with some flaws in the blockchain system and in particular how it has been structured with many of the bad practices that Bitcoin advocates hoped to escape from finance traditional.
This resulted in a generalized loss of confidence in Bitcoin as it has been integrated into the current banking system and involves tools such as futures, options or long and short leveraged. Consequently, it is more influenced by the same structures that affect traditional financial instruments, sinking along with gold and causing investors to become cash. What is even more disturbing is all the speculative activity about the Bitcoin price of whale calls acting in collaboration with the exchanges. This has caused many cryptocurrency enthusiasts to feel that the entire market remains a great game for those capable and willing to make easy profits at any cost to others.
But now it appears that the community is gradually beginning to overcome the blow COVID-19 gave it and seek approaches more positive regarding the current situation. Recent research they show that the end of cryptocurrencies is far from inevitable.
1. The idea of another market correlation is still relevant
What has already happened and continues to happen with the global economy is, without a doubt, a devastating scenario. Starting in early 2020 with the collapse of the Chinese manufacturing industry, which hit mining companies before Bitcoin's next halving, it resulted in most governments enacting extraordinary measures, including nationwide quarantines and complete border closures. . A sharp 30% drop in crude oil prices occurred just after Russia opted for Do not join with other oil producers around the world to reduce production. The subsequent market reaction was rapid and downward, with US indices falling down by more than 6% along with the total drop in US Treasury yield below 1% for the first time in history. However, oil prices began to recover relatively quickly, with intermediate crude from West Texas in the US. jumping more than 23%. The international benchmark, Brent crude is now liquidates $ 33.79 per barrel. And many have viewed this as a sign of hope that the financial market will eventually correct as before.
In the cryptocurrency arena, people are also counting on the market to find their feet again. Bitcoin's performance in 2017 is still fresh on everyone's mind, making many cryptocurrencies really concerned about their funds. The true summer bull market for cryptocurrencies, which took Bitcoin and other assets to unprecedented heights, was followed by a similar massive 30% drop, which seems to become a familiar reason and remove billions of dollars from all over the world. cryptocurrency market in a fraction of a second move. This was one of the biggest market fixes in recent history, forcing Bitcoin to forget about approaching the desired $ 20,000 and start its healing process by trying to get back above $ 11,000. Looking more closely at what is happening around the market right now, the situation is very similar.
2. Panic selling is mainly the work of the whales
It's always worth bearing in mind that cryptocurrencies are big market players who can secretly trade huge amounts of money under a preliminary deal with the exchanges. Their great fortunes allow them to influence (or even manipulate) the market at will so that they can make prices fall or explode without anyone being able to deviate them from the plotted course. The ultimate goal of Bitcoin whales is to buy low and sell high, out of sight of naive average traders who have to think carefully before moving in with their assets. Or they can simply become victims in an imperceptible scheme for them.
The vulnerability of the world economy is providing quite fertile ground for those seeking to maximize their profitability. And the Bittrex case shows that the more obvious your anxiety is, the more suspicious the situation is. When Whale Alert, a tracker of large cryptocurrency transactions, reported A large transfer of over 47.6 BTC worth around $ 292.2 million from an unknown wallet to the Bittrex exchange, the quick sale led Bitcoin to lose approximately $ 3,000 and more panic transactions are expected during the epidemic. But if traders stop copying the whales' confusing moves and distance themselves from these cunning giants, the Bitcoin price will have a better chance of maintaining relative stability.
3. The Blockchain mass adoption process is already accelerating
The World Health Organization (WHO) has strongly recommended that people use contactless payments because physical cash can serve as a form of transportation for COVID-19. But isn't that exactly the environment Bitcoin needs to gain popularity against the collapse of the stock markets? The pandemic is already accelerating the processes of legalization of cryptocurrencies in Germany Y South Korea, along with the adoption of digital currencies by the central bank in the India. China is making efforts launch its digital yuan as quickly as possible while the United States is on its way to launch discussions on the digital dollar. This, together with Facebook's Libra and Telegram's TON projects, aimed at uniting millions of cryptocurrency users worldwide, has the potential to become the mainstream of cryptocurrencies in the next 2 years, as Deutsche suggested Bank in a report recent. However, the use of cryptocurrencies and blockchain at the government level depends in part on the attitude of retail markets towards cryptocurrencies. Interlapse Technologies CEO and Coincurve Co-Founder Wayne Chen insist on that we must do everything possible to convert Bitcoin more into a currency:
"If Bitcoin were a payment method that could be used on Amazon, it would be much more sought after."
One more trend supporting cryptocurrency adoption is promoting different types of crypto charities, such as The Giving Block initiatives, which grant donations in BTC and ETH to those suffering from the virus, Collab19, which also contribute to donations with public cryptocurrencies, and Folding @Home, which is helping a lot in the search for a vaccine.
4. Stablecoins at the forefront of the market
During the ongoing turmoil, demand for stablecoins, especially from Tether (USDT) and USD Coin (USDC), has been evident due to a large influx of funds from investors and regular traders lurking behind stable digital currencies. USD Issuing Circle CEO and Co-Founder Jeremy Allaire revealed that the USDC has reached a new record level of $ 568 million outstanding, tweeting:
"It is fascinating to see the 'flight to security' within the macro crypto market, but also demand for high quality USD liquidity for the markets."
Some smaller coins, such as Binance USD (BUSD) and Paxos Standard (PAX), have also witnessed significant inflows that have allowed them to improve their performance and market cap rates. Allaire predicts that the need for digital dollars that are "fast, global, safe and cheap to use" will increase significantly: "People and companies will want an architecture where they can make and receive payments with less counterparty risk and more security."
5. The pandemic itself is not as severe as we first thought
Some new opinions on COVID-19 are no longer as bleak as before. For example, Nobel laureate and biophysicist at Stanford, Michael Levitt believe that the United States can do better with the coronavirus outbreak than Italy, Iran and even China, where a decrease in the number of confirmed cases has already been observed due to quarantine and social distancing measures. . Furthermore, the polls conducted by medRxiv, the prepress server for health sciences, have stated that, due to the widespread underreporting of confirmed cases of COVID-19, the death rate is probably much lower than the official WHO 3.4% and it is likely to be around less than 1%.
Other data from Oxford University they propose that the true number of infected people is greater than we imagine. The researchers suggest that if it's really true, then the virus is less likely to cause more severe symptoms and mutate a lot. The US Whitecoat Team supports this view and says that the coronavirus is "a little more basic" than we imagine, which is good both for stopping the disease and for developing the vaccine.
So what to do until the COVID-19 crisis ends?
Controlling blind panic and evaluating the spread of the pandemic is what we need to bring back the lost sense of normalcy in people's lives. No one can say exactly if Bitcoin will regain its isolated asset status or if it will suddenly fall back to its lowest level, because unfortunately it showed that it has a very strong correlation with traditional stock markets that have been no less volatile during the ongoing collapse.
So the best you can do is avoid making reckless economic decisions and taking refuge in neutral territory to make the most of these difficult times.