During the last few months, we witnessed one of the worst pandemics in history. COVID-19 has had a huge impact on everything from the way we apply for jobs to the economy. This is bad news for everyone, especially traders as global trade for the second quarter of 2020 will drop by about 27 percent. Tourism will also drop by up to 78 percent. What many people are wondering is what’s going on with the crypto industry. Is it dead? The answer is NO. COVID-19 will, however, affect crypto, and if you’re wondering how, make sure you read on.
Crypto is becoming gold 2.0
For centuries, people have been using gold to store their wealth. It was one of the safest ways to do it. This was mostly because whatever happened in the world of finances, gold retained its value. Just take a look at traders who’ve been using as a tool for diversifying their portfolios.
With the pandemic going on, things are starting to change. Gold still has its value but trading with it isn’t as easy as it was. When the coronavirus first became a thing, traders starting buying gold as they expected the value of stocks to drop. Stocks saw a significant drop in value but traders also couldn’t buy gold. The reason behind it was that logistics became a huge issue. Borders were closed and traders couldn’t transport it. This is when they decided to turn to crypto.
Instead of dealing with transportation, traders were now able to obtain assets they want in a blink of an eye. All it takes is a few clicks of a button and they’d get the digital currency they want. With this going on, experts started referring to crypto as “digital gold” or “gold 2.0.” Therefore, if you’re looking for a way to store your wealth during (and after) the pandemic, crypto is the way to go.
The prices didn’t go down too much
A few months ago, the COVID-19 pandemic started in China. Everyone in the cryptocurrency business expected the value of these currencies to drop significantly. This was mostly because more than 70 percent of the world’s mining power happens to be in China and South Korea. At this point, the fear was natural and some were skeptical about the future of crypto.
Luckily, companies that mine digital currencies were ready for something like this and they made it possible for miners to obtain crypto even during the lockdown. The nature of the job is such that you don’t have to be in the company’s headquarters to get the job done. Companies in the crypto business took the right approach and made sure digital currencies don’t suffer a bigger drop than they have to.
By the end of March, the overall drop in value was about 15 percent. This may seem a lot but it’s important to take into account that all prices are moving in the same direction. While a future drop in value is eminent, crypto will continue to follow other prices and investors won’t lose money. This is another reason why investing in crypto is safe even during the COVID-19 pandemic. In fact, it may be one of the safest investments you can make in a situation like this.
Finding the “right” currencies has become the key
If you look at all the currencies in the world, you’ll see that COVID-19 hasn’t had the same impact on all of them. The same thing happened in the world of crypto. There are numerous factors that contribute to how much the pandemic affected the currency. Some cryptocurrencies even performed better during the pandemic.
With the rules in trading starting to change, traders have to be more cautious when choosing what to put their money into. As a result, finding the “right” digital currency to invest in has become critical. Traders now have to do more research before making moves. Luckily, tracking the best-performing digital currencies isn’t as tough as some people imagine. It takes a simple Google search to find out more about Monero and its 23.7 percent jump. And if you type in “Libra” you’ll see that the Facebook cryptocurrency won’t be released until 2021.
It all comes down to finding the resources that offer the most value. For example, if you visit AskTraders, you’ll be able to look at Litecoin predictions and check how safe investing in this asset is.
Banks will start to buy crypto
It’s no secret digital currency is still in its infancy and we’re still coming up with new ways to integrate it into our lives. The same thing is going on in the business world. If you take a look at what was going on during the last few years, you’ll see that banks weren’t keen on buying crypto. Regulators have been very cautious about it and the banks that tried to obtain it failed to do so. In Germany, over forty banks were unsuccessful in this.
Throughout history, banks used mathematics to identify the best moves they can make. Unfortunately, mathematics doesn’t take into account natural disasters and some new approaches have to be considered. This is why banks are now starting to buy crypto.
The word “scarce” is once again extremely important for banks and scarce assets are more valuable than before. Crypto provides all the long-term stability they need and we’ll see more banks turn towards it in the future. This has the potential to completely reshape the role of digital currencies in banking.
The bottom line
The COVID-19 pandemic is here and we cannot afford to ignore it. While no one wanted to see drops in value take place, they’re just something we’ll have to live with. The good news for traders is that crypto seems to be doing great, even during the pandemic. The way all of us see crypto will change once the pandemic is over and it looks like its role in our everyday and business life will increase. Maybe we’ll soon even get a chance to see it replace traditional currencies.