Coronavirus Effect on Global Economy and Possible Crypto Solution
The beginning of the new decade has started with an event that is already severely affecting our everyday life. Back in the November of the previous year, a highly dangerous Coronavirus (COVID 19) originated in China. In a matter of several months, it spread across the whole planet, shattering the economy and financial sectors in almost all the countries of the world. Global finance and economy is at risk, correspondingly, so is the monetary well-being of the general population. When it comes to financial security for the people, there might still be a glimmer of hope. While everything around is going bust, cryptocurrencies could be the solution that’ll provide considerable financial security.
Negative Global Impact of the Pandemic
In order to provide a better picture of the global effects – this pandemic has on the economy, it’s enough to look at the several key categories. If we start from the stock market, the reality is simply terrifying. FTSE, Nikkei and Dow Jones have all been massively falling since the outbreak, with a 31%, 34% and 29% decrease, respectively. The biggest one-day declines since 1987. Considering the outbreak is only getting stronger, governments around the world might not be able to repair the damages. In a meantime, central banks in more than 50 countries have cut their interest rates to try and strengthen the economy.
Travel and hospitality industry is the sector that is probably taking the biggest hit during these events. In the US, Around 4 million people are probably going to lose their jobs because of the pandemic. Airways have already cancelled most of the flights and people refrain from going anywhere for holidays or business trips. Hotels and recreational institutions are almost all on lockdown. Which means that people are losing their money and possibilities to work. More than 100 countries around the world have travel restrictions.
Aside from the global economy, local small businesses have been severely impacted by the pandemic. People are forced to close up restaurants, services, shops, malls and all the other commodities that we’re used to in our daily lives, due to quarantine regulations and social distancing laws. There are no incomes, no salaries and total uncertainty about the future. Global factories and companies are closing down, leaving people jobless and scared for their financial well-being.
“Safe” Investments compared to Bitcoin
If we look at the things from an investment standpoint, usually the safe bet was always Gold and Oil. Gold is considered to be the “Safe Haven” of investments. But Today’s reality shows a different picture. The price of Gold is now plummeting. Its price tag was almost $1700 just several weeks ago. Now the price stands at $1476, which prompts an unavoidable global recession.
Another usually stable commodity has taken a heavy impact in the recent weeks. The oil prices today are lowest since the year 2001, with the barrel being priced at $26 currently. Just a mere month ago, it’s value was around $60. Investors fear that the global pandemic will damage the global economy further and decrease the demand for oil.
The recent addition into the echelon of “Safe Haven” assets – Bitcoin, has alternatively experienced growth in the recent weeks.
Bitcoin as a Solution
Although the month of March has started turbulently for the BTC, with its price plummeting to almost $4000, today the price is close to $7000 Mark, all while every asset in the world is crashing in its price. Many experts attribute it to the fact that only 21 Million Bitcoins will ever exist, and many investors turned towards the asset because of its limited sum. “Bitcoin’s crash was a knock-on effect of the stock market collapse, as panicked investors sold any assets they had for cash, so they could pay off urgent debts to their broker,” cryptocurrency expert and author Glen Goodman told The Independent. At this moment, things are going back to normal with Bitcoin’s price rising each day.
Another strong argument towards the safety of Bitcoin during turbulent times are the factual statistics of cryptocurrencies. The market capitalization and entire value of the cryptocurrency market, has risen over $14 billion in the last couple of days, reaching $182.62 billion in total. Data from Coinmarketcap.com
Back in 2017 An investment magnate Mike Novogratz, has blatantly stated that he believes that Bitcoin is going to be the digital “Gold”, when it comes to property acquisition. After all, it seems like his words were full of truth.
What to Expect in the Future?
No expert in the world can fully predict the future, it’s always all down to extensive knowledge, experience, statistical analyses and theoretic predictions. Today, the world is facing one of the worst financial crises in history, and it seems like things are only going to get worse before they get better. If we listen to various experts of finance, Bitcoin and other cryptocurrencies might truly be the safe haven of the economy, with people having a chance to stay vastly unaffected by the global recession. All it takes is a little trust and belief in the virtual assets of the future.
Contributed by George Khmelevski