Judging by the 50% drop in Bitcoin prices in just a few days in early March 2020, it’s pretty clear that cryptocurrency is by no means immune to the global dip which the coronavirus has created. It’s not just Bitcoin that’s feeling the squeeze: all cryptocurrencies saw a drop in price over the past month. Although at first sight, this news is alarming, in many ways it’s reflective of the more general bear market that COVID-19 has indirectly created. As a growing number of governments forcibly shut non-essential businesses and tell workers to stay at home, it’s inevitable that markets will suffer.
Some cryptocurrencies still showing an overall rise
Whilst the short-term picture isn’t the best, over the past twelve months, several cryptocurrencies have experienced an overall price rise. These include Bitcoin and Ethereum. In addition, the alternating pattern of bear and bull is fairly typical of the trading path which most cryptos take over time. It’s unlikely that the current buyers market will continue indefinitely – as various countries come out on the other side of the pandemic, it’s highly likely that economies will begin to rally. This, in turn, will strengthen markets and asset prices should follow suit.
Will COVID-19 see the end of cryptocurrency?
Despite the initial dip in prices, the average prices for several cryptos are beginning to slowly creep back up again. Whether this trend will continue, and whether it will be sustained across all cryptos, remains to be seen. Of concern is the amount of time it will take for economies to recover from the damage which COVID-19 has caused – not least because of the complex interrelationship between the markets and the economy is further complicated by traders’ subjective views on the virus’ progress. Whilst it’s unlikely COVID-19 spells the end of cryptocurrencies, it’s highly likely to create a depressed market for some time to come.