What is driving cryptocurrency growth amid the COVID-19 pandemic?
Bitcoin Rises As Investors Panic Over Coronavirus
Cryptocurrency Rises As Fears Over Coronavirus Outbreak Shock Global Equity Markets.
Worry about the rapid spread of the coronavirus is one of the factors driving the growth of bitcoin, an asset that often rises when investors get nervous. But this is not the only factor driving Bitcoin’s growth..
«Bitcoin’s recent rally can be attributed to continued economic uncertainty», – noted in comments for CNN Business Sean Ji, COO of digital token company Digix.
Gee cited lingering concerns over U.S.-China trade relations, concerns over Brexit, and political tensions between Japan and South Korea as factors that drove bitcoin prices up. But the coronavirus is clearly the biggest catalyst of late..
«Bitcoin price rise correlates with ongoing epidemic outbreak», – pointed out by Gee.
In that sense, the latest spike in the value of bitcoin is like gold’s stellar game this year. This precious metal has also risen this month and is now trading at a seven-year high..
«Is this peak bullish sentiment for the stock market? Gold and Bitcoin rally as investors seem less convinced of the rally in stocks than they were last year», – Maria Veitmane, State Street’s senior asset strategist, told CNN Business.
Weitman added that Bitcoin, like gold, benefits from the fact that interest rates are low (or in some cases negative) following policy easing by the Federal Reserve and many other central banks in the past year..
This has resulted in the depreciation of the US dollar against other currencies over the past few months..
Bitcoin, gold, and other cryptocurrencies and precious metals have historically thrived when investors bet the value of major government-backed currencies will fall.
«There is new consensus on dollar weakness», – said Wayman.
«Bitcoin and gold can continue to be profitable as safe investments, Gee agrees. – Gold and Bitcoin have become a well-known alternative for retail investors looking to preserve their earnings».
Investors looking at Bitcoin as a long-term investment should probably think of Bitcoin the same way they do gold. It may be a small part of a portfolio, but investors shouldn’t get hung up on it, especially considering the volatility of the cryptocurrency..
After all, the price of bitcoin is still more than 50% below the all-time high of $ 20,000 it reached in December 2017, although it has nearly tripled since its recent low of $ 3,200 in December 2018..
Investing in bitcoin has become more popular thanks to the cryptocurrency initiatives of large tech companies like Square and Facebook.
«The support of Square and Facebook is definitely very important for the entire cryptocurrency, as they promote distributed technologies, as well as shared digital assets and the cryptocurrency space, ” writes Gee in his comments. – The use of cryptography by these companies can allow ordinary users to enjoy the versatility and flexibility of the technology».
The rise in bitcoin futures trading on the Chicago Mercantile Exchange could also help validate bitcoins through larger mutual funds, hedge funds, and pensions.
«In my opinion, one of the biggest participants in the rally is the hope that institutional investors will be able to go digital en masse by 2020, driven by growing customer demand and more attractive ways to gain access than direct coin ownership.», – wrote on his blog by Frank Holmes, CEO and Chief Investment Officer of the United States of Global Investors.
But Holmes acknowledges that the SEC could provide the biggest boost to Bitcoin if it ever approves a crypto-backed ETF. So far, the SEC has rejected numerous proposals.
«It’s no exaggeration to say that Bitcoin ETFs are highly anticipated.», – Holmes wrote.