The main digital coin is often attributed to “protective assets” on a par with gold. We tell you why it may rise in price in the near future, and why the opposite – it may fall sharply in price.
The connection between the cryptocurrency and fiat, as well as the Blockchain industry with the non-digital reality, is specific: on the one hand, in terms of both the volume of crypto-economics (it is too small in the global sense) and the existence of real and effective interdependence.
The connection between the cryptocurrency and fiat money, as well as the Blockchain industry with the non-digital reality, is specific: on the one hand, in terms of both the volume of crypto-economics (it is too small in the global sense) and the existence of real and effective interdependence.
The last “testing” (according to the “Fed’s rate reduction” trigger) of the dominant coin on “defense” last year also failed to meet the expectations of crypto economists – a large-scale conversion of USD into BTC did not happen. And there were no liquidity rivers on the crypto exchanges. It is probably worth mentioning here that the Fed has not lowered the rate for more than 10 years, and the similar reaction of the cryptocurrency market was very indicative.
If we talk about the influence of worldwide interconnections of assets, one of the main drivers for Bitcoin is gold prices and the Chinese yuan rate, the correlation of prices with which is obvious. Against this background, there are disruptions in gold production (China is the world’s first gold producer with 426 tons per year), which will lead to higher prices for precious metals. For the same reason, the Chinese yuan will begin to weaken, which, as in spring-summer 2019, may lead to higher prices for Bitcoin (then the correlation was quite high).
Another important factor affecting the exchange rate is the complexity of Bitcoin production. The shutdown of a large number of farms at a time will lead to a decrease in the complexity of BTC mining, followed by a decrease in the cost of cryptographic material. Market participants may go to crypto exchanges to sell their coins, as mining will be a much more profitable enterprise than the holding.
At the moment, this may have a negative impact on the value of Bitcoin, however, in my opinion, the redistribution of network complexity will not take long, and the market will quickly find a level of balance beneficial to both miners and investors in the cryptocurrency. Anyway, the bitcoin PayPal exchange will be useful now.
Rather, I expect Bitcoin to grow after a local decline amid falling production complexity. However, how much BTC will rise in price, we can only say after making sure that the epidemic has acquired national dimensions.
And what is the result of this?
There is no consensus among experts on how the coronavirus will affect the Bitcoin course. However, even those experts who believe that the disease may affect the main digital coin, explain that this will only happen if the outbreak grows to a full epidemic.
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