The Importance of Bitcoin In The Time of Economic Uncertainty
2020. What a year it has been. Nobody saw it coming. Let’s be honest. None of us would have thought the world would be this devastatingly affected by the COVID-19. I have friends who were playing down COVID-19 impact on the world’s economy and health crisis when they found out the virus was destroying Wuhan. They thought it would be controlled soon and would never cause big problems for the world. Apparently, they were wrong, just like the rest of us at the time.
Yes, the coronavirus had been spreading all over the world ever since. Many countries decided to go into lockdown and many others were still severely impacted even if they chose not to get into lockdown. Lockdown or not, the economy has been doing much worse compared to 2019 or the years before.
But what does it mean for Bitcoin? Well, here’s an interesting fact. The crypto market (Bitcoin included) has been doing well, overall. Can it continue its upward momentum? Now that’s another question.
Q2. 2020 Has Been Kind To Bitcoin But Not To The World
After the flash crash in early March, where Bitcoin price sharply went down, BTC has been going up ever since. Yes, there were some ups and downs here and there, but BTC has been doing much better than most markets out there. If you look at the retail economy all over the world, they have been struggling a lot. The crypto market even has outperformed the stock market and physical gold in the past few months.
Economic Uncertainty Will Always Be Good For Bitcoin?
So, let’s talk about the direct question. Does it mean economic uncertainty will always be good for Bitcoin? Well, even though the current crisis has been “kind” to Bitcoin’s price, it doesn’t mean that the future is predictable. Keep in mind that early March (the beginning of pandemic) Bitcoin price actually crashed severely to below $4,000 before it gradually recovered and eventually made a yearly high.
It is actually possible for BTC to repeat that similar price action back in March, especially if we have another liquidity crisis that will suck up all the demand in the market. For now, things look good for Bitcoin as governments all around the world are trying to inject liquidity through stimulus packages, big loans, money printing, and all the other crucial policies. However, things might not last like this forever.
At the end of the day, it depends on how long the economic uncertainty is going to last. Many so-called experts might be wrong with their predictions as we have never faced a pandemic like this in the past century. The devastating effect on the global economy might need a lot of time to fully recover. Jobs are slowly coming back but there are many job sectors that might never truly recover from the pandemic.
Bitcoin Is Fulfilling Its Purpose
Whatever the future may have for Bitcoin and the crypto space, one thing’s for sure. So far, it has fulfilled its purpose as a hedge against mainstream economy and fiat currencies. While the USD and its inflation problems have disappointed the people over and over again, Bitcoin has been trusted by crypto enthusiasts to be the perfect store of value in the modern era. It’s interesting to see that BTC has passed its early test in a year where most people suffer from economic hardships.