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CRYPTOCURRENCY

Cryptocurrencies Market Performance during the Covid Pandemic and Its Drivers

Cryptocurrencies Market Performance during the Covid Pandemic and Its Drivers
The Siliconreview
23 Febuary, 2021

Have you been asking yourself if there's lesson to be learned from the way cryptocurrency performed and continues to perform during the COVID crisis? If so, you are one among many who ponder the same thing. If you look at the big three cryptos, Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH)all traveled a rather similar path since the virus escaped from a Chinese laboratory and began traveling around the world.In the wake of the pandemic, individuals lost their jobs, countless small and large businesses went bankrupt, and entire national economies suffered severe repercussions. Maybe the only silver lining to the whole thing is about the many lessons we can all learn. There are dozens of worthwhile ones, but five stand out. In no order of importance, they include are.

COVID Made Crypto Stronger

Many small and medium-sized businesses were victims of the pandemic, as were millions of individuals all over the world. There were few winners, if you count a winner as a company that nearly lost everything but then rebounded. The handful of real survivors included companies in the health care sector and the major cryptocurrencies like Bitcoin, Ethereum, and Litecoin.Did COVID help the cryptos? In the long-run, it appears so. From early March to late August, most of the big-three virtual coins fell precipitously and then rebounded to pre-COVID levels. But, after that, all three took off. This is just one reason so many people are excited about cryptocurrency trading in 2021 and after.

The Big Three Coins Showed Their Strength

As noted, BTC, ETH, and LTC dipped for a few months, rose again, and then had run-ups to record-setting price levels by the end of January 2021. Why? There are several reasons that might be behind this odd behavior. It's enough to say that huge numbers of people finally got around to examining the safety, profit potential, and widespread acceptance of virtual money. Apparently, the vast majority of them liked what they saw because attitudes seem to have changed a lot.

Acceptance Means Higher Prices

Two key events did a lot to bring widespread social and business acceptance for Bitcoin and its fellow market leaders. The first was a late 2020 announcement by PayPal that it would begin accepting BTC as a form of payment and monetary storage in all accounts. Next, Tesla's Elon Musk, in February of 2021, purchased $1.5 billion worth of BTC, which instantly sent the coin's value up by about seven percent.Moguls and major corporations aside, more and more retail and e-commerce companies are accepting crypto money as a legal tender for of payment now that the initial phase of the COVID pandemic are past. Apparently, all it took for some merchants to begin using virtual currency was a little push. That push came in the form of BTC and other coins demonstrating their viability through a crisis.

Security Fears are Waning

In the early years of cryptocurrency, there were widespread fears about the security of wallets, those online storage locations where owners of coins keep their coded collection of unique account identifiers. Regular stories in the mainstream media reported on breaches, hacks, and other problems with stored coins. Everyday investors stayed far away, prices traded sideways, and a handful of wealthy individuals accounted for most of the trading.

Nowadays, with the help of AI and big data technologies, crypto coin security has improved a lot. People are learning about offline wallets and discovering indirect ways to purchase a stake in the newest form of currency. For instance, there are now ETFs (exchange-traded funds) where individuals need not worry about wallet security, key codes, or any of the standard virtual-coin safety measures. You simply buy shares in the ETF and let the fund track the crypto market while you're shielded from risk of hacks and breaches.

Desire for Growth is a Price Driver

Unlike precious metals and traditional stocks, there appears to be a much higher potential for growth with crypto coins. Why? Because they have no physical limitations. Their prices are only limited by demand, which means that BTC could conceivably rise as much, percentage-wise, as it already has in the past few months. Likewise, its price could fall precipitously, which is one characteristic that makes it just like every other investment out there. There are no sure things in any investment market, but the growth potential of virtual currency is one of the things that many investors gravitate towards as we continue to see prices soar day after day.