The COVID-19 pandemic has impacted practically every country, business, and individual. Tourism, travel, food and beverage, and manufacturing industries have been hit the hardest, but every industry around the globe was impacted.
When trouble started in Wuhan, China, we saw the Asian stock markets suffer immensely, and a similar wave happened to European, UK, and US stocks when WHO officially declared COVID-19 a pandemic. The stock market witnessed some of its worst days since the global financial crisis in 2008, and crypto assets also felt the big hit. The price of Bitcoin (BTC) dropped drastically too.
Other crypto coins suffered immensely, too, and while BTC has the ability to recover their losses, other coins face a harder fate. Newer altcoins, like DASH, for example, rely on selling their digital currency to fund their development. DASH operates through a special system where community members will vote on proposals that are financed using DASH. This means that the higher the price of DASH, the more funds are available for the projects. And while DASH is a big, well-funded project, the same cannot be said for small crypto projects; a massive price drop could be devastating for them.
The time for stablecoins
In a time of uncertainty, people have turned to currencies that offer them some sort of stability. Over the last few weeks, more investors have turned to dollar-backed digital currencies, such as Tether (USD) and USD Coin (USDC), as well as smaller coins like Binance USD (BUSD) and Paxos Standard (PAX).
Amidst all the negative news, Co-Founder and CEO of USD Coin, Jeremy Allaire, tweeted:
“[USD Coin] surging in market demand over the past days, reaching new ATH at $568m in circulation. Fascinating to see “flight to safety” within the crypto macro market, but also demand for high-quality USD liquidity for markets.”
“Demand for internet dollars — digital, fast, global, secure, cheap to use — should increase significantly. People and businesses will want an architecture where they can make and receive payments with less counterparty risk and more security,” he concluded.
At this stage, blockchains continue to work as normal; most crypto exchanges and startups have moved to remote working quickly and with little difficulty due to the nature of their business. The global shift towards remote working did not affect the world of crypto since it is one of the industries that is best equipped for remote working. While other forms of businesses have struggled to adjust, the crypto industry is familiar with remote work.
But what about Bitcoin?
And about the matriarch of the crypto world, we saw BTC recover after falling over 50% in early March. The coin kept the $5k mark quite well and grew to over $6000 towards the end of the month. This was an interesting change of events after a devasting beginning to the month. This gives BTC and crypto enthusiasts a ray of hope since it was initially believed that the ‘digital gold’ would not follow other markets.
This week has been a bullish scenario for Bitcoin, but skeptics have a negative view of the gain. One long-term Bitcoin hater, Peter Schiff, expressed that “Bitcoin is no longer a non-correlated asset. It’s positively correlated to risk assets like equities and negatively correlated to safe-haven assets like gold. When risk assets go down, Bitcoin goes down more. But when risk assets go up, Bitcoin goes up less. No value in that!”
At the time of writing, 1 BTC is worth $6,643.99.