In March 2020, after news of the Covid-19 spread, markets all over the world started having a difficult time. The stock market went through its biggest fall since 1929 during the Great Depression and the cryptocurrency market followed.
The panic for something unknown and unpredictable. Brought an acute liquidity crisis before an economic one even started. One reason this happened was that a lot of investors turned their possessions into cash to protect their finances.
The cryptocurrency market went down as well during March. For example, bitcoin decreased to $3,780 but rebounded easily. Aside from some price correction. Which analysts consider very normal, BTC is becoming steadier and is being considered as a safe haven in an unsteady global economy.
One of the reasons why crypto became so important after the pandemic is because our whole life has turned to technology during the lockdown. Businesses have turned their hopes to digital infrastructure. And virtual money was there to fill all the demands they had.
Can digital money help the economy throughout this pandemic?
Many analysts and crypto enthusiasts think about bitcoin as a way to help with the rising inflation that comes from the pandemic.
Central banks are printing more money to deal with the effects of Covid-19. Leading the way to the reduction of its value and an increase in inflation.
Since Bitcoin issued 21 million tokens, and there won’t be created anymore in the future, it permits to resist inflation.
Even if inflation isn’t currently rising in the US or other big countries. People may be purchasing BTC to protect themselves from future increases. But in other countries like
Venezuela, where the inflation is exceptionally high, or in smaller ones with weaker economies. People are advised to hedge their wealth with alternative assets, like cryptocurrency or precious metals.
According to a forecast of the European Commission. The economy in the eurozone will rebound later than in the US. And maybe this is the reason why the Europans’ interest in crypto is rising.
The road that leads to the use of digital currencies in our everyday lives is still very long due to each government’s regulations. But it is not an impossible one.
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