Hackernoon logoCryptocurrency in the Time of Crisis: What to Expect by@elaine-bennett

Cryptocurrency in the Time of Crisis: What to Expect

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@elaine-bennettElaine Bennett

Freelance blogger, digital marketing specialist and tech enthusiast

Your Easter plans for this year probably looked a lot different. Instead of spending time with our families and enjoying the first days of spring, we stayed home wondering how the future will look like.
But the COVID-19 outbreak didn’t only change our social plans. It disrupted all aspects of life from social interactions to the global economy. While saving lives is the primary goal right now, wondering how the economy will look like after the crisis is the concern that bothers many.
With stock market crashes and many people temporarily or even permanently out of jobs, there are legitimate fears that we’ll witness another global financial crisis that could potentially be worse than the 2008 crisis.
In the middle of these big economical changes and global financial insecurities, you might be wondering - what’s happening with cryptocurrencies?

A good way to diversify your investment portfolio

An unstable market situation caused by the ongoing pandemic might not seem like a good environment for cryptocurrency investments. Even if you already own cryptocurrencies, you might be tempted to liquidate and get more cash into your pockets.
However, this would actually be a terrible idea. In fact, as stated by Sir John Templeton The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.
Putting all of your eggs (pun intended) in one basket is rarely a good idea when it comes to investments, especially in a volatile situation such as this one when it’s impossible to predict how the market will look like in the following months.
In times of financial uncertainty, the best way to ensure some sort of financial security is by diversifying your portfolio. This actually might be a perfect time to buy cryptocurrency or even invest in a bitcoin mining rig and start your crypto journey.
Bitcoin has often been referred to as digital gold and praised for its potential to be a safe haven investment. While it’s impossible to predict what exactly is going to happen with Bitcoin during the crisis, we’ve already had a chance to see how it reacted to the first hit of crisis and it can serve as a guideline for future predictions.

The value of Bitcoin

The panic caused by COVID-19 surely caused traditional markets to tumble, with the largest stock market crash since the 2008 crises. However, alternative assets haven’t been spared either. Even the value of gold, the go-to safe haven asset that endured the test of time, fell more than 10% this year.
Similarly, the COVID-19 panic hasn’t spared the digital gold either. Bitcoin also experienced this downward trend, suffering losses of almost 50% this March. On March 13 The value fell below $4,00 from over $7,000 it held at the begging of March. However, it managed to bounce back relatively fast to the value of $6,783 it holds today.
These ups and downs surely seem scary, but let’s not forget that these are not normal circumstances. On the contrary, the current market situation is much like the 2008 crisis where we saw assets such as gold being liquidated, and the same thing is happening right now to Bitcoin. Further down the line, we can expect that the bitcoin will behave much like gold did during the 2008 financial crisis.
While this does call for caution, it seems that the worse has already passed. It’s clear that bitcoin has recovered from the recent market crash faster than it’s traditional assets.
In the long run, we can expect that the value of Bitcoin will continue to rise. Investors who take advantage of the Bitcoin price dip and see this crisis as an opportunity to get Bitcoins at low price points will have the best chance to gain the most after the crisis is over.

Crypto scammers are getting crushed

At least some good news amid this horrible crisis. A few days ago, Chainalysis broke the news that 33% of cryptocurrency scammers’ revenue has been whipped out during the crisis.
Between the 13th and 31st of March, the total value sent to cryptocurrency scams on a daily bases dropped 61%. In the meantime, some of it has recovered, but the total values remain lower than before. Nearly all of those losses are concentrated around the two most popular scam categories - Ponzi schemes and investment scams.
However, it’s not all good news. Unfortunately, while investment scams and Ponzi schemes are being crushed by COVID-19, it’s given scammers the opportunity to develop whole new narratives around the crisis, especially those involved in email spamming tactics.
While these scams are rarely successful, they still need to be taken seriously and the general public should be aware of them.
We can’t know for sure when the COVID-19 crisis will end, and the more it lasts, the more long term impact it will have on the cryptocurrency market and the global financial situation. We can probably expect more changes, so stay informed, stay home & stay safe!

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