Bitcoin versus Coronavirus
There was a panic in the financial markets of all countries amid the restrictions introduction in March 2020. Against the background of a sharp fall in American stock indices, the bitcoin price has also been declined. The drawdown level was 50% to $ 3800 for the first cryptocurrency. However, in the event that the pandemic in the United States and Europe goes to gain momentum rapidly, it will again affect the markets.
The S&P index is much “overheated”: the spread between the companies’ profitability and their capitalization is a record one and this is a real financial bubble. Therefore, in the event of a sharp deterioration in the situation with the pandemic, a global downward correction will inevitably occur. It’s hard to say how deep it will be now, it will determine the monetary policy of the United States. New injections of liquidity will support the market, but this will not last forever.
In such a situation, the most likely scenario is the bitcoin growth, since it has already become “digital gold”. Investors around the world already perceive bitcoin more as a defensive asset, so it is obvious that its rate should continue to grow.
Apart from private investors, bitcoin has long been used by institutional investors. More and more companies are investing in the cryptocurrency market – digital finance during the period of instability acts as a “safe haven”.