Satoshi Nakamoto an anonymous group or person launched a whitepaper on 31 October just after the banking crisis of 2008, stating that Bitcoin: A Peer-to-Peer electronic cash system. Bitcoin has gained interest from developers and some tech geeks in its early stages.
In the early stages, Bitcoin is only used for Gambling token and dark markets because of its pseudo-anonymous nature. Many financial experts and analysts then start believing that Bitcoin is a Store of Value assets just like Gold. The community also call Bitcoin as “Digital Gold” or “Gold 2.0”.
From the past decade, the value of Bitcoin increased from $0.0001 to $5200 (price at the time of writing) and made an all-time high of $19700 in December 2017. The purchasing power of Bitcoin continuously increasing in the long term.
Corona Virus Crisis is the Bitcoin Reality Test
The whole world is suffering from the Coronavirus (COVID-19) and World Health Organisation (WHO) declares it as a global pandemic. Major countries like China, USA, India declare COVID-19 a national emergency and shut down all public places including parks, schools, colleges, movie theaters, etc.
The effect of coronavirus is seen on the whole world stock markets, commodity markets and Forex markets. The whole world economy is slowing down because of COVID-19, people are advised to store necessary food and rations in advance.
Bitcoin and cryptocurrency are not immune to the COVID-19 effects and Bitcoin has seen the 3rd largest drop in its history on 12 March. Many experts and analysts saying that this the reality test for Bitcoin. Will Bitcoin behave as a store of value assets or fail in the economical crisis.
Bitmex the largest cryptocurrency derivative exchange wrote in research that this is the biggest test for Bitcoin. The research question about bitcoin store of value prospects:
“In such an economic environment, with high inflationary expectations, gold looks set to shine. But what about Bitcoin? Bitcoin has crashed by almost 53% (peak to trough) in the 2020 Coronavirus crash, as investors raced to the US Dollar. In many ways this was inevitable. Where the Bitcoin price may shine is in the volatile inflationary aftermath of the response to the crash.”
Bitcoin Market Showing Strength While other Markets continue to Fall
After the drop Bitcoin quickly recovers from $3700 to $6900 that is more than 65% increment of the value. Bitcoin is able to hold the $5000 support zone while the other markets continue to fall because of the COVID-19 slowdown.
The S&P 500 and Dow Jones have lost around 30% of value in the past 1 month. Crude OIl market loses more than 55% in the past month and Gold is down around 10% in the past month. If the global markets continue to fall and Bitcoin able to hold its position then investors will think about investing in Bitcoin. The next few weeks are very crucial for the Bitcoin. Many investors and analysts closely watching Bitcoin to conclude how it will perform in a financial crisis.