Bitcoin, Cryptocurrency and the Pandemic

 The economic impact of the Covid-19 pandemic has changed the US and global economies. The common thread of governmental responses to the pandemic have involved various degrees of quantitative easing and monetary policy. The overall effect suggests that there will be currency inflation due to policies that increase money supplies.

Preserving Cash Value

The past impact of economic shutdowns were sharp and severe. They required governmental action to ensure economic viability for broad swaths of populations. In the US, government efforts included multi-trillion dollar investments in economic sectors. businesses, and households. Whether this type of action will continue may be in douubt, but the Federal Reserve policy seems certain-  they will continue to pump money into the banking and finance systems.

In a period of monetary easing, some companies with cash reserves have decided to diversify their  holdings with Bitcoin. Their theory is that Bitcoin may be a more stable value in a period of sharp increases in money supply than cash reserves.

Bitcoin  Option

A trend emerged in early 2020 of transition of cash reserves to Bitcoin.  Some recent news items and crypto-community  reporting demonstrates the movement from cash to Bitcoin. With the common theme of holding value, the conversion trend has included the below-listed firms.


  • Snappa - Canadian graphics software company  
  • Microstrategy- a NASDAQ listed firm
  •  Tahini’s - Restaurant chain
  • Square - Square, Inc. (NYSE: SQ) builds tools to empower businesses and individuals to participate in the economy.
  • Stone Ridge- Developed a spin-off  "executing cryptocurrency purchases, and then holding on to the assets for their customers."
  • Mode- a UK  FinTech enterprise 
The trend towards Bitcoin as a shelter against currency inflation may have far-reaching impact on the short term price of Bitcoin and its long-term role in global finance.
 
Pandemic Fight Continues
 
In the US and western Europe, the fight against the pandemic is in various stages of increased intensity. Governments will have little choice but to continue or increase economic support for unemployed, dislocated, and otherwise impacted populations. Businesses will also continue to demand concessions.  To the extent that increased money supplies affect currency values, Bitcoin may grow as an alternative to holding cash as reserves.

Individuals, Investors, and Small Businesses
 
Bitcoin may get a fresh look and have a renewed appeal to families and small businesses. Some services like PayPal have opened Bitcoin and cryptocurrency purchasing options using credit accounts, bank debit cards, and credit cards.
 
While purchasing whole Bitcoin at $13,000- $15,000 may be out of the reach for many, some services allocate cryptocurrency into fractional ownership. Many currencies currently have pricing well below Bitcoin including Ethereum, Ripple, Tezos, and Chainlink.

In the pandemic, Bitcoin and cryptocurrency will continue to attract new levels of attention and new groups of potential individual, business, and corporate buyers.

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