Covid-19 puts Bitcoin to the test!
Corona-virus’s Covid-19 strain, that was born around Mid November 2019, has already taken many by surprise. In terms of both its threat towards the human life, and more so due to the economic impacts it is capable of inducing. And due to its birth during a human economic crisis, people are now asking and some even questioning:
How will Bitcoin behave this time?
For the very first time in human history, the bitcoin system gave a naive user the opportunity to take part in a network that could include every single human on Earth. This inclusiveness is what blown its popularity out of proportions and soon Bitcoin proved to be the mother of all market penetrations. Several Bitcoin followers spent hours arguing how it can act as a fool-proof system of exchange of value, specially during a possible crisis. Now is the time to have a closer look and to see the reality yourself.
Bitcoin price amidst Covid-19 fallout
Apparently the crash appears to have happened in two steps. In step 1 Bitcoin sees an approx 20% dip starting the first weekend of March 2020. This seems to have been triggered by institutional btc selloff. Step 2 of the crash happened around 2nd weekend wherein Bitcoin lost half its worth in a matter of just 1 day. Overall, the crash is evidently a result of Covid-19 fallout. Hence, this brings us all very close to an important question.
Does bitcoin current price really depicts it true value?
· In terms of fiat value, most likely NO! Bitcoin as a system is immune to Regulations, External Control, Inflation, Malicious updates. However, In the recent times, most Bitcoin consumers have used the asset as another tool or unit to increase their wealth. Just the way they do in a typical equity market. As a result, the patterns shown by Bitcoin during the recent fall mirrors most of the other segment of stock markets around the world.
· Higher percentages of Institutional holdings make it vulnerable to global market events. The fall from 8K all the way down to 3.7K was apparently a result of huge selloff by Institutions[2][3].
What is making Bitcoin mirror the global meltdown?
We need to understand that current existence of Bitcoin ecosystem is still fueled by the traditional money handling system, i.e. the Fiat currencies. Most of the bitcoin consumers still use Bitcoin as an “asset of some value” that drives them towards “Fiat exchanges”, where they buy and store their assets. Bitcoin as a system can see its potential unleashed only once it is accepted as a truly global currency that anyone can use and hold.
Let’s Wait!
This is more of a question than comment. Whether Bitcoin ever becomes a globally recognized currency that can be exchanged in return of goods sold? If that happens, its value may be much more than a 100K or million that people predict. It is then when this system becomes really reliable and a safe haven for the investors in the time of need as your money cannot be lost inside this system due to NPAs.
References\Credits
[1] Chart image taken from coinmarketcap.com
[2] https://www.ccn.com/institutional-money-may-be-igniting-the-current-bitcoin-rally/
[4] Image by https://pixabay.com/users/parveender-5611058
[5] Image by https://www.pexels.com/@worldspectrum
