Cryptocurrencies are here to say – despite what the naysayers might have you believe. Yet there’s every reason to believe that the crypto sector won’t just survive the current crisis, but that the conditions could exist to entrench it further still.
Here’s why the future looks bright…
Opportunity for investors
Yes, prices dropped at the start of the crisis – and by eye-watering high amounts. But, as anyone trading forex will know, that market volatility was felt by other assets too. Not only that, but volatility is what makes this such an attractive asset for investors. Movement provides opportunity – but there’s also a chance for people to see cryptocurrencies as a ‘safe haven’ that might be shielded from the worst effects of inflation if policymakers pump money into their economies post-crisis.
The market can be tough to predict and understand – so it’s important to gen up on trading best practice (these books are a good place to start) and look for smart opportunities during a volatile time. However, it’s key to note that a ‘crisis’ in itself doesn’t necessarily spell bad news for cryptocurrencies.
Legislation suggests it’s being taken seriously
Remember the days when governments were actively trying to ban cryptocurrencies? Those, it seems, are over. Countries such as South Korea which were previously hostile to this sector have passed landmark legislation in recent months to regulate and legalize cryptocurrencies.
While some are nervous about regulations removing one of the key selling points of cryptocurrencies, this sort of thing can only further the opportunities for more people to use them.
Blockchain technology is playing its part
Cryptocurrencies make the most of blockchain technology to allow money to be transferred swiftly and safely. This current crisis has seen a rise in the use and need for blockchain, which only serves to help to strengthen the case for cryptocurrencies and make their adoption a more natural next step. Blockchain is helping businesses to work remotely, for countries to develop contact tracing apps and to look at ways to better monitor and react to future pandemics. Post-crisis, we’ll need a more fundamental look at the way in which we can harness this technology to work smarter, safer, and quicker.
Crisis questions the existing order
The cryptocurrency revolution began, in part at least, thanks to dissatisfaction with the old order. While a new crisis presents a challenge, it could also serve to reinforce why that dissatisfaction began in the first place.
Galaxy Digital founder Mike Novogratz certainly thinks this could be the case. He tweeted: “$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 crypto sector was born in a crisis, might it not now come of age in the next one? At the very least, some of the questions that cryptocurrency sets out to answer will be raised in 2020 as a result of the coronavirus and its fallout.
With the old order being questioned, traders treating crypto as a volatile – and potentially lucrative – asset, the turning tide of legislation, and the beneficial rise of blockchain, the foundations are in place for a strong 2020.