Has COVID-19 Affected Cryptocurrency?


Covid-19 has taken a heavy toll on virtually every sector of the economy and led to a massive loss of livelihood. Many have had to reimagine their careers to sustain their incomes.

People from all over the world are learning to live with constant uncertainty. However, the post-COVID period has not been all doom and gloom. After weathering the pandemic’s initial shock, global stock markets have been climbing steadily over the past few months.

Has this upward trend reached the crypto market?

The Initial Crash

Cryptocurrencies did not escape the destructive effects of COVID-19 on commodities and securities. By mid-February, the most prominent cryptocurrency, Bitcoin, had plummeted by almost 60 percent. Most other cryptocurrencies, including Ethereum, shared the same fate, though their gravity of loss differed.

By the end of March, there was a 15 percent overall dip in the crypto price. To rub salt into these virtual wounds, cyber scammers have taken advantage of the pandemic to con holders out of their virtual cash.

This double blow to cryptos has served to dent the confidence folks had in this form of currency. As Bitcoin’s unit price and the likes nosedived, some investors hurried to dump as much of their crypto as possible. They feared the price tag would continue on this downward trajectory, so they moved to cut their losses as early as possible. They shifted their investments to traditional commodities like oil and gold, which seasoned investors deem less risky.

Others, however, view the glass as half full, saying that this is the ideal time to learn more about cryptocurrencies as many people are now curious about them as an investment avenue.

It has everything to do with the fact that the prices are currently low, allowing those who were previously locked out to get a foot into the crypto market. Some crypto enthusiasts add that cryptocurrency is a safer investment avenue than fiat currency as it’s not government regulated.

Will Cryptocurrency Recover?

The beauty of crypto is that it’s not run from a physical office, so operations were never really halted, even at the lockdown period’s height. And the fact that they are mostly independent of any government control means that policy changes, even those made in reaction to global tragedies like Covid-19, don’t directly affect their value.

With this in mind, it’s no surprise that Bitcoin and numerous altcoins are already on the path to recovery. As at the end of April, Bitcoin’s unit price had recovered by 10 percent. Ethereum has shown growth by about the same percentage from the height of the crisis.

Covid-19 is the peak of a bleak period for cryptocurrencies. The lion’s share of crypto firms has been in a bearish market over the past two years. Those who have survived and grown—even modestly—will surely weather the coronavirus storm over this period.

With lower prices, investors are expected to encourage crypto holders to buy more units and tempt novice investors into getting their feet wet. Experts encourage you to take advantage of the low prices if you have never gotten into the crypto market. But for the long haul, you need to keep your eyes open, equipping yourself with as much information as possible.

Crypto Will Thrive on Youth

A recent survey conducted by Harris Poll indicated that ignorance of cryptocurrency is waning. It further showed that the demographic most responsible for this rise in interest in virtual currencies is those aged between 18 and 34; the so-called millennials. According to the survey, this age group was most optimistic about cryptocurrencies; close to 50 percent felt that they would become a prevalent medium of exchange in the next ten years.

With such positive sentiment about crypto from the most economically active sector of the population, the future bodes well for Bitcoin. Conversely, another survey showed that confidence in traditional financial institutions and their investment vehicles is slowly eroding. Indeed, this has been true over the past decade or so.

As you contemplate joining the growing crypto bandwagon, there are some things you need to know. First, arm yourself with information on the fundamentals of cryptocurrencies. It would be best if you learned what they are and the various ways you can make money using them. You also need to keep careful track of your transactions as these will be used by the Internal Revenue Service to calculate your cryptocurrency taxes.

Where do we go from here?

Covid-19, devastating as the disease and its effects have been, may soon be but a speck in your rearview mirror. Negative as many of these effects have been, the pandemic has presented some unique opportunities.

Get informed and if the numbers add up, make an investment. Then you may have reason to smile when you look into your life’s rearview mirror.