After President Trump came to power in 2016, the US financial market appeared to be revitalized despite indicators of recession during the first half of the preceding decade. The US sector reported a cumulative rise of 58% in the past three or so weeks just three weeks ago. However, the latest World Health Organisation announcement on March 11 of the novel coronavirus pandemic, claiming 118,000 cases and over 4,000 fatalities worldwide by the international testing agency, seems like this rosy image has almost flipped over overnight.
Moreover, ever after the news came live about the medical emergency, stocks all over the world began to crash extraordinarily, with giant economies like Australia and India now heading for a spell of extreme contraction.
Daily workplace operations around the globe have been seriously interrupted–with many businesses adopting homework measures that have significant consequences of global production chains and contributing to the cancelation of several high-profile public gatherings and international conferences.
The impact of the virus
In the midst of all this, Bitcoin (BTC) was under tremendous strain, with the largest crypto asset dropping from $10,000 to $4,800 on February 24, 2008. More specifically, after the public statement issuing a medical emergency, Andrew Cuomo issued by New York state governor, Bitcoin’s value fell by over $3,000 and scrapped a one-mile containment area in the New-Rochelle suburb of New York.
While the price decline in BTC seems to be linked to the continued downturn in the industry some analysts suggest that the crypto-currency fall is more associated with the latest PlusToken dump and other internal causes than with the new investor panic caused by the coronavirus.
In this respect, Wilshire Phoenix’s CEO, Bill Herrmann, claims that Bitcoin’s present downward change can be directly related to the uncertainty of the mainstream sector. In this respect, he expressed his view that “in times of extreme volatility, often followed by panic, most retail investors, whether Bitcoin or stocks, are first to sell and to ask questions later.”
Mati Greenspan, the CEO of Quantum Economy, is still holding the same view, which states that in this time of intense uncertainty it is very remarkable that “Bitcoin tends in quite simple terms to mirror market indices.”
Nonetheless, David Waslen, CEO of HedgeTrade, a blockchain financial exchange platform, said that although Bitcoin is certainly comparable with the mainstream economy as a whole, there are very restricted similarities of nature as a variety of specific variables render BTC very special.
Is Bitcoin a completely independent interest store?
Greenspan suggests that the developments now taking place have delivered a crippling blow to a variety of ideas that other pro-consumers gravitate towards as the price of BTC increases or falls independently of the mainstream stock market:
“This is a negative hit to two tales that supporters of Bitcoin appear to gravitate to. Firstly, the asset class is incompatible. And secondly, Bitcoin is now positioned as a risk asset rather than as a haven as it behaves like the inventories during unpredictable times.”
Simon Peters, an analyst at eToro, is also persuaded that the aforementioned connection is primarily apparent owing to the pandemic that is the foundation of mainstream and crypto markets.
Finally, the co-founder of Cache, a gold-backed tokens retailer, Brian Hankey said that while gold and silver will see short-term losses, medium to long-term losses, they should continue to be seen as good investment opportunities. He also found out that the precious metal has strong potential because of the different manufacturing uses associated with it.
Covid-19 has greatly lowered business indications
While Bitcoin demonstrates that it is not often simple to follow conventional market trends— if any sort of associated connection mechanisms is not checked— cryptocurrencies are often commonly viewed as a single separate, asymmetrical class of money.
Japan Cutter, CEO of the BDAM Financial Services Company, said Bitcoin was unable to reach its target, as much in the crypto-community assumed that the world’s biggest digital asset was declining because prices are falling. In the meantime, Bitcoin’s valuation store was rival to traditional safe havens such as gold and silver.
Eventually, Bitcoin has achieved, until 8 March, in keeping with high storage, gasoline, and certain other markets, much of its worth. Gold, with the precious metal price almost seven years strong recently, was the only other asset that proved more durable.
Eventually, a rapid winding up was announced on Thursday and Friday on the larger cryptocurrency sector where most digital currencies saw a 20 to 40 percent downward correction. Eventually, in reaction to the coronaviral scare, Bitcoin has been tracking the majority of the financial markets down, though with some two weeks of pause.
Is a global recession at the very edge or are we in the middle?
Everybody believes that a global banking environment is on the brink of a full-scale crisis well before Covid-19’s challenge begins affecting supply chains across the globe. Now that a variety of economies have been pushed to decline dramatically by the coronavirus, a variety of analysts suggest the consequences of the global economic recession continue to reveal themselves.
Explaining his thoughts on the topic, he believes that a recession-type situation may be a positive thing because of the reality that years of low-interest rates have caused strong irresponsible malinvestment, as “It is obvious the global financial system is extremely debt-burdened.”
It is also important to point out that the latest $1.5 trillion infusion of money by the Federal Reserve into the economy–after the disruption of the Wall Street circuit two times this week — seems to be a strong indication that concern over coronavirus is severe and a global recession could be on the horizon.
Yet not everybody appears to accept that a bear market is here to live. In this regard, Cuttari thinks that the current situation is caused by all the ongoing economic chaos, rather than by the virus fear, rather than by a market recession.
How does the crypto business have in the future?
By rising benchmark levels significantly by central banks all over the world and contributing to negative rates, the global economy may be hard to think optimistic at present.
Alternatively, this time around it is an alternative to switch to the crypto market. In comparison to periods where the only path out for millions was to rely on modern monetary regimes. The crypto platform is for the digital public and has allowed the masses to exchange peer-to-peer. This makes it somewhat different, particularly at a time of potential catastrophes in the global economy.
Throughout the light of this, Waslen believes that global demand expansion throughout sectors that are currently under siege is more likely to be established in the short to medium term. He assumes that Bitcoin too can rise and fall with the same macro events impacting mainstream markets as well as other variables such as the upcoming halving, as precious metals continue to highlight steady supply production.
Ultimately, Hankey is moderately hopeful regarding Bitcoin’s potential to withstand the present crisis. He believes that if a major global recession survives, it is likely that Bitcoin will increase its perception and reputation of the market as a legitimate financial instrument further.