How COVID-19 affects the Crypto Market

In a matter of just merely two weeks, the COVID-19 outbreak has changed almost every single aspect of our daily life. It is no surprise that the virus has also had a huge impact on the financial market, which can be seen in the falling stock prices all over the world. In this blogpost we will give you an overview of what has happened so far and how this will affect the future of the crypto market.

Why the Crypto Market Crashed

With its big focus on decentralization, many people see Bitcoin and co. as kind of a safe haven asset, that cannot simply lose value due to disasters and external factors, like e.g. politics. So to the cryptosphere it was a big shock that most cryptocurrencies dropped in their value when the COVID-19 outbreak hit the stock market. Even though cryptocurrencies are a safe haven from these types of interferences, this was just too much for the crypto market to handle. To picture this, Binance’s CEO Changpeng Zhao even compared cryptocurrencies to be “a float tied to the titanic”. Whereas the float will stay over water, it is still affected by the big ship sinking.
He also stated that the market decrease is most likely due to many people feeling pressure to sell their assets in order to be able to afford to pay for more essential goods. Many people have lost their jobs due to the lockdown in many countries, so it is no surprise that people want to use their savings for rent and groceries instead.

A Statement from our CEO Florian Wimmer

Our CEO Florian Wimmer shares some thoughts on the current situation of the crypto-market: ”During the past few days we’ve seen a very interesting development of the crypto-market. During times of crisis, the stock market is falling but cryptocurrencies, especially Bitcoin, have quickly recovered from the initial selling phase and show great performance. For the first time we can clearly see how the correlation of Bitcoin and co. and the regular market really is like. Could it be that investors see a suitable additional diversification of their portfolio or even a ‚safe haven‘ in cryptocurrencies?“

As many people enter the crypto market now, it is important to not forget the responsibilities that come with Bitcoin and Co. In most countries you have to pay taxes for any profit made through trading and other activities involving cryptocurrencies. An easy solution to file your taxes automatically is the Blockpit App.

Current Developments in the Crypto Market

Interestingly, the activity and amount of users on the crypto trading-platform Bitpanda has peaked in the past couple of days. The lower prices seem to attract traders and those who seek to become one. Many people also see this as the start of a Bitcoin bull run, which explains why the trading platform has experienced growth. Aside from that, Bitpanda offers a more exclusive asset class than most platforms, and that is precious metals. Gold has proven to be an asset that people rely on, even in tough times and during crisis of national fiat currencies.

But not all companies only worry about their financial situation and the future development of the crypto market. On a more positive note, CoreWeave, the USA’s biggest Ethereum mining company, has decided to provide all of its processing power towards finding a cure for the Coronavirus. Examples like this show us how in difficult times, even relatively new fields like the crypto market can help to improve the overall situation and contribute to finding a solution.

In the next weeks, the crypto market will see many changes and overall repositioning in the domain of finance. As the spread of COVID-19 is forcing more and more countries to take drastic measurements in order to control the outbreak and its consequences, the following weeks will tell how Bitcoin, Ethereum and co. will shape the future of the economy.

For more information visit us on: https://blockpit.io

Sources

https://cryptoslate.com/binance-ceo-explains-the-real-reason-why-the-crypto-market-crashed-last-week/
https://www.coindesk.com/thousands-of-these-computers-were-mining-cryptocurrency-now-theyre-working-on-coronavirus-research
https://www.derbrutkasten.com/bitpanda-bitcoin-coronavirus/
https://www.binance.com/en/blog/421499824684900472/Is-Bitcoin-a-Safe-Haven-A-Note-from-CZ

Disclaimer

The information provided in this blog post is for general information purposes only. The information was completed to the best of our knowledge and does not claim either correctness or accuracy. For detailed information on crypto regulations we recommend contacting a certified legal advisor in the specific country. If any questions occur, feel free to contact us on our social media channels.

Stay up-to-date with Blockpit when it’s about taxation of your cryptocurrencies. Track your portfolio in real-time and get a personalized tax report.