COVID-19 AND BITCOIN
Crypto currency is an online medium utilised for financial transactions using crypto graphical functions. Algorithms that are pre-programmed and already defined are used for the governance of crypto currencies thus making it transparent and immutable. Another advantage that can be relished by its users is that it can be transferred directly between the parties involved in the transaction.
COVID-19 or Coronavirus disease is a globally spread pandemic having huge impact all around the world. It was believed by many that after the virus outbreak Bitcoin will gain popularity and most of the transactions will be carried out through Bitcoin as it is considered to be safe at the time of the crisis. But this wasn’t true as Bitcoin also got affected by COVID-19 and saw a significant downfall.
It also important to remember that the value of Bitcoin is demand driven and is not affected by factors like GDP and interest rates on which other currencies depend.
As per the reports provided by Organisation for Economic Co-operation and Development (OECD) it has been predicted that global GDP growth will decrease from 2.9 to 2.4 percent for the year 2020 because of COVID-19. Also Bloomberg Economics has predicted the GDP to reach zero if the pandemic reaches its worst case. This has also led to a decline in the financial market and has been reported that the longer the virus spreads more the performance of the company and economy will be affected.
Due to this pandemic crypto currency has also seen a decline. In the last few days Bitcoin has witnessed about 61% decline, from $9,000 to $3,800. If the spread of COVID-19 continues in this manner Bitcoin is expected to decline further.
Even with this rapid decline in Bitcoin it has been predicted by many researchers such as Chris Burniske a Blockchain pioneer, who is also a partner at Placeholder VC investment group, that Bitcoin will be one of the fastest recovering assets. Chris Burniske states that similar declines have been witnessed by Bitcoin back in 2015 and 2018. He even stated that if COVID-19 doesn’t slows down and continues to rattle the global market Bitcoin could drop till $3,100 which it even reached back in 2018. It is to be noticed that Bitcoin didn’t close above 200-week MA then. Even in 2015 the same were the case as it closed below its 200-week MA. Even though it is not conclusive at present the ultimate bottom which Bitcoin could reach but based on the historical president of Bitcoin it is conclusive that it will recover instantaneously and will start running again.