Impacts Of COVID-19 Pandemic On Virtual Currency Adoption

News, Opinion | March 13, 2020 By:

The COVID-19 pandemic has certainly brought the world economy to its knees. With stock markets at decade lows, cancellations of large events, and even Bitcoin prices taking a huge hit, the financial and emotional stress is hard to suppress.

As people pull their investments out of traditional markets such as stocks or bonds, we’d naturally assume it will be diverted elsewhere. Gold is always expected to perform during any crisis, and we’d hope some of that capital also ends up in virtual currencies. 

You would expect virtual currency to shine during a pandemic crisis. However, the virtual currency market has been following the footprints of the stock market. It is apparent that people trade virtual currencies more like investment rather than currency.

At times like these, it’s unfair to put Bitcoin in the same category as 5000+ other virtual currencies, so let’s forget virtual currencies and strictly focus only on Bitcoin. Bitcoin has always been deemed as a good store of value. This COVID-19 crisis will be the ultimate test since Bitcoin was released more than 10 years ago. So far, it hasn’t held its reputation as a store of value, however, things may change as the situation adapts. During any early phase of panic, emotions take over and make rash decisions without reason, so what we have seen so far may only be a knee-jerk reaction.

The ultimate goal for Bitcoin is to be used as a global currency, and we have been making good progress. However, this COVID-19 crisis will really put Bitcoin to this test. 

Ultimately, the situation really depends on how bad it gets. If the world becomes a ghost town, there will be no interest in any type of investments. Liquid assets, particularly cash, can become the strongest asset, as you can still pay for daily necessities online and have them shipped to your home. 

Bitcoin can do the same, but whether merchants will accept it as a form of payment during a pandemic is a big question mark. Perhaps, we are just around the corner as a global currency. Or, perhaps Bitcoin can create its own market and help with cross-border payments that help reduce cost for imports and exports.