Almost the entire world is in lockdown of some form or other, due to the Coronavirus pandemic, and the markets have been diving for the last week or two. The future is unknown and some predict that the “shocks rippling through the global economy in early 2020 may yet come to dwarf the magnitude of the 2008 financial crash.”
This is interesting from a cryptocurrency viewpoint. Remember that Bitcoin was born as a response to the 2008 recession, and Galaxy Digital founder Mike Novogratz sees this year as make-or-break for the cryptocurrency.
Novogratz tweeted on 22nd March, “$BTC will continue to be volatile over the next few months but the macro backdrop is WHY it was created. This will be and needs to be BTC’s year.”
The traditional markets have suffered their worst crash since 1987, and bitcoin plummeted by 60% “to lows of around $3,600 on some exchanges.” Today it is hovering around $5,800, and we’ve seen a succession of gains and losses across the leading cryptocurrencies over the last few days.
Ten days ago Novogratz argued that Bitcoin was no less vulnerable to the impact of the frantic liquidations we have witnessed as investors have even deserted gold to some extent, and have been in sell-off mode for several days now. He tweeted, “[Bitcoin] was always a confidence game. All crypto is. And it appears global confidence in just about anything has evaporated.”
However, now he is tweeting about the potential opportunities for the cryptocurrency amid the economic crisis. In his view, Bitcoin “was designed precisely as an alternative to the faltering world monetary system.”
Changpeng Zhao, founder of Binance, the crypto exchange, has also noticed Bitcoin’s decoupling from the “COVID-stricken traditional markets, and has argued that the pandemic should be understood as a trigger, rather than the root cause, of a visibly fragile world economic order.