How The Coronavirus Epidemic Impacts Blockchain And Cryptocurrencies?
April 13, 2020

How The Coronavirus Epidemic Impacts Blockchain And Cryptocurrencies?

The Coronavirus pandemic has affected every country around the world. The virus shook every sector of the society, be it health, science, government or business sector.  It is taking the lives of hundreds of people, disrupting social and economic patterns of societies worldwide and is causing enormous economic losses to the global economy. In March 2020, international financial markets and financial assets including cryptocurrencies experienced the largest phase of turmoil in a century.

Where the effects of COVID-19 are apparent in various sectors of the society, it has not left Blockchain companies and the Crypto market unaffected. Since the emergence of digital currencies, there has not been an economic or financial crisis. Cryptocurrencies faced major price swings because of the crisis. Some believe that digital currencies can guard during market turmoil. Unlike traditional methods which include physical involvement that can lead to further spread of disease.

At the beginning of March, cryptocurrency prices swung between lows of $4,000 and $9,000. Showing the most severe price volatility since the global downtrend started at the end of 2017. Recently, the digital currency hit highs close to $7,500.

Though a crisis is a curse for the world we can expect it to become an opportunity for some like digital markets including cryptocurrency exchange software. While stock markets and global economies are already feeling the hit, the ability to work remotely is more commonplace now than ever before.  It is time for the crypto and blockchain business to avail the opportunity and reshape digital strategies and create new opportunities in the digital world.

What Is Coronavirus And Why Would It Impact The Crypto Market?

Coronavirus is transmitted from animals to humans. It is transmitted through coughing sneezing and shaking hands in humans. The virus can live for several hours on different surfaces and you can get affected by simply touching fingers to your mouth, nose or eyes. The only way to prevent this is by washing your hands with soap for 20 seconds.

The 21st century is digital and it is going to dictate a set of new rules. Now people don't need gold for liquidation to meet a crisis. The trends have changed and people have moved to digital currencies. Recently, a rise is observed in digital markets including blockchain firms, crypto developers and developers that create crypto exchange software.

Digital enterprises operate without the need for banks. Many even consider cryptocurrency as a haven. Typical financial markets can cause a lot of uncertainties. In digital market some people are likely to buy the dip and others are expected to dump their crypto assets. The whole market capitalization of traditional market is high and of digital currency is very less. That is why multiple factors can have an impact on the overall crypto market during the Coronavirus epidemic.

How Is Coronavirus Impacting The Crypto Market?

COVID-19 caused large fluctuations in the crypto market.  Every single cryptocurrency felt the impact, as most of them lost half or more of their value. Often leading to boom for those involved in cryptocurrency exchange development. And other times leading to the bust of firms that create cryptocurrency. Both of these situations come with a variety of challenges for traders, consumers, and developers.

Positive Impacts Of Coronavirus On Cryptocurrencies:

As the situation due to COVID-19 worsens, countries have put people on lockdown. This social distancing has become a problem for everyone, except for the digital markets. People have shifted their trading and investments to online markets. The shift to digital markets has favored all individuals involved in the blockchain sector. The usage of digital money has increased insignificantly. Not just this, but Coronavirus pandemic has impacted the Cryptocurrency market positively in a lot of other ways like:

1. Print Money Is Not Enough

Due to the sudden outbreak of the coronavirus, countries started full lock down's. Also, businesses closed down, the economies diminished, and governments had to respond. The governments can't put a trillion dollars out in the economy unless they just do a tax holiday. Ultimately, they will turn to crypto markets.

2. Opportunity For Cryptocurrencies

The crises will make people realize that these currencies are frictionless, open, transparent, and global. Instead of using dollar, people can use digital currencies. Digital currencies are the best and most convenient to use during a global pandemic

3. Remote Interaction

Cryptocurrency exchange software users and customers have actively embraced remote interaction from the beginning. Therefore, the global shift to remote work will not cause serious damage to the blockchain industry. As most cryptocurrency startups can work remotely and develop without compromising the quality of interaction between the parties.

4. A Blessing In Disguise

Coronavirus pandemic can be a blessing in disguise for the blockchain and crypto enterprises. It makes people realize that it is the only true free market in the world. The market can go down 50% in one day and doesn't need government intervention to stabilize. It is easier to liquidate than other stocks, bonds, real estate, and gold. There are no state borders nor any logistics issues.

5. Increased Blockchain Preference

As the paper processes are not possible during the epidemic, firms will shift to blockchains to make supply chains more efficient for sharing sensitive information digitally

6. Retail Investors Shift

As the whole world is on lockdown because of Coronavirus, it becomes a challenging situation for retail investors around the world. Most retail investors will become Crypto investors now. All the investors need to do is stay home and trade.

7. A High Time For Developers

The COVID-19 has proved to become a good time for the developers involved in the crypto market. An opportunity for crypto application software and exchange software's to bring a great amount of users to their website. These developers can use certain tactics and introduce features that are both appealing and a need of the moment for the world.

8. Decentralized Nature

The blockchain firms and crypto markets have a digital nature. Blockchain industry cannot be affected by the deadly virus as they are decentralized. Their digital methods do not require handling paper notes that may carry the virus. So another advantage of the epidemic is that they will help in decreasing the spread of the Coronavirus. This will eventually turntables for the digital market.

9. Increased Employment

Everyone is on lockdown. Employers have fired their employees due to financial instability. So many people have lost their jobs. The world is now running from home because of the rapid spread of Coronavirus. In this case, employment rates have increased in digital markets. People are willing to work for blockchain enterprises and crypto markets. Many developers have introduced new employment opportunities in the field of the digital market.  Digital markets are reliable and transparent. So crisis time is the right time for the crypto markets.

Negative Impacts Of Coronavirus On Cryptocurrencies:

Where Coronavirus has affected the digital markets positively in many ways, there are a few negative impacts that follow them. Amidst a crisis, people are more likely to panic. They start worrying about no more losses. The eagerness of people might shift many back to fiat currencies and much more. See the list below:

1. Scarce Funding

Raising funds becomes difficult during the Coronavirus pandemic. Venture capital companies are the backbone of the cryptocurrency industry. They invest money in promising projects which drive the Crypto business forward. These enterprises will erase billions of dollars from the market when their coins start losing half of their value. This, in turn, leads to low funding.

Gustav Christopher Wagner, founder, and CEO of market data provider Blockfacts emphasizes:

"As the COVID-19 becomes a global crisis, talks with potential investors are limited to video conferencing. Fortunately, venture capitalists are happy to hold virtual meetings and close-range financing. However, money in niche markets has decreased. "

2. Investments At Stake

The most susceptible to risk is investment funds or hedge funds in the field of cryptocurrencies. Hedge funds are made to protect investment portfolios from uncertainty in the market. They help to leverage the capital of their clients

3. Peak Volume Records In Cryptocurrencies

The cryptocurrency software's lack installed circuit breakers like that in traditional platforms to protect their traders. Here trigger circuit breakers trigger trading halts during times of severe downwards volatility. This gives time for investors to recheck the situation and act accordingly amidst crises.

4. Shift Of People From Cryptocurrencies

Crypto coins cannot be used to pay for basic things, so cash is the only way to buy food and medicine. Therefore, people move away from risky assets and shift to survival mode. They are most likely to sell off their coins to get liquidity.

5. No One To One Relation

In an epidemic like that of Coronavirus, it becomes difficult for the crypto investors to hold one on one meeting due to social distancing. Investments are the basis of all crypto markets including those involved in cryptocurrency exchange development and those who create a cryptocurrency. Lack of direct communication leads to low investments by investors.

Final Words:

Though a crisis is a curse for the world we can expect it to become an opportunity for some like digital markets including cryptocurrency exchange software. While stock markets and global economies are already feeling the hit, the ability to work remotely is more commonplace now than ever before.  It is time for the crypto and blockchain business to avail the opportunity and reshape digital strategies and create new opportunities in the digital world.