- Bitcoin, other cryptos, and digital assets have gained in popularity during the pandemic, as more people showed lesser reliance on cash.
- Bitcoin has witnessed a significant difference in demand in the pre-COVID-19 and post-COVID-19 eras.
- Only gold and bitcoin have shown an increase in demand since the pandemic occurred, and now there are speculations that bitcoin will replace gold as a safe haven.
- National banks and their shares took the hardest hit as they were forced to print more money to boost the economic recovery.
As global banks suffered a massive plunge due to the coronavirus pandemic, digital assets have been categorised as attractive, as they are immune to the current business affairs.
A quarterly report, published by the Singapore-based banking giant DBS Bank, highlighted that digital transactions are getting more popular by the day and has branded 2020 as a milestone in the history of finance.
If nothing, the pandemic has shown that consumers rely less on cash and have been more in favour of contactless and digital payments. Cryptocurrencies are getting more recognition, which could lead to increased usage in the near future.
These findings have increased cryptocurrency popularity, as they were claimed by a respected bank and its chief economist Taimur Baig.
Pre-COVID-19 and post-COVID-19
Bitcoin’s development can be described within two different eras: pre-COVID-19 and post-COVID-19 era.
Before the pandemic, investors saw bitcoin as an exciting asset but did not want to risk putting significant portions of their portfolio in the cryptocurrency. Its demand was speculative at best because of high volatility and a possibility to burst like a bubble.
On the other hand, bitcoin demonstrated significant advantages compared to fiat currencies, such as its fixed rate that will likely reach its end by 2140 and decentralised network that is not connected to any central bank.
Among other cryptocurrencies, bitcoin remained strong and became even more valuable during these unprecedented times. Compared to fiat currencies that have been inflating ever since, investors are putting serious thought into moving their assets to bitcoin, while holding on to the gold investments. This comes as no surprise because gold has held the title of a safe haven for ages.
Some famous investors and several overseas banks have contributed to the rising popularity of bitcoin. One of the high-profile investors that moved a portion of his portfolio to bitcoin is Paul Tudor Jones, instantly providing bitcoin with more acceptance and trust.
Constant technological improvements and privacy that blockchain technology offers will most likely be two of the key reasons for future investments in cryptocurrencies. That is probably why the DBS research group believes that bitcoin and other cryptocurrencies are here to stay.
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Who took the hardest hit?
Unlike cryptocurrencies that are virtually resistant to government intervention, banks do not share the same feature. The KGW Nasdaq Index share has taken a 33% plunge because of huge losses that banks had experienced. The only stocks that were some-how doing well were those from the US.
Luckily for bitcoin and cryptos, inflation, that happened due to the printing of more money, has pushed investors to look for a new way of storing their wealth. Now, only the future will tell if that was a smart thing to do.