With COVID-19 causing severe turbulence in the stock market, the move towards investing in digital assets is increasing. Coronavirus has impacted all financial products whether it be traditional equities and bonds, commodities, or even cryptocurrencies.
Digital assets have the potential to disrupt entire industries and the global market. The economic impact of the pandemic has resulted in a surge of interest in digital assets, mainly Bitcoin (BTC).
In early February, Google searches for bitcoin surged by 33 per cent, demonstrating the increase in interest for an alternative to a bank controlled economy. As a result, out of all digital assets offered, I believe this could be Bitcoin’s year with an impending boom in digital asset adoption across the globe.
Bitcoin adoption
Those that were getting margin called in their other assets had to sell BTC in order to gain liquidity to continue to fund those other assets. This is perhaps evidence that BTC has finally been adopted as an alternative asset since the wider adoption (and trading of) BTC by both retail and institutions, the more macro-effects will have an effect on its prices.
Challenges faced by bitcoin
Although Bitcoin was created with an intention to replace traditional currencies, it is still hard for it to be adopted as a mainstream currency because of the time it takes for transactions to be confirmed.
In fact, the authorities in Indonesia (where Zipmex is legally regulated) have decided that digital assets are a commodity and should be regulated under their Commodity Futures Trading Regulatory Agency (BAPPEBTI).
Whether or not digital assets should be viewed as a commodity is a debate for another day since there are many types of use cases of digital assets whether it be stable coins, asset-backed or utility tokens.
An attractive investment post-COVID-19
Many agree with the fact that Bitcoin is like digital gold – a commodity in which you can invest in during current tough times. Its price is determined by the belief that is instilled in it.
In fact, after the almost 40 per cent drop in prices, BTC has rebounded significantly. At the time of writing, it has increased by approximately 70 per cent from its lowest point this month.
Hence, at Zipmex we believe in providing digital assets as an alternative financial instrument, especially in times of crisis.
Global recession and bitcoin
With a global recession looming, purchasing power of traditional currencies is bound to be impacted. For those who understand the benefits of cryptocurrency, I predict there will be a surge in interest in owning bitcoin.
This will be mainly down to cryptocurrencies’ ability to alleviate a portion of pending pressure on traditional markets as we enter a global economic downturn.
Source: e27
