The financial markets have been bracing for the impact of a second wave of Coronavirus. But what about Bitcoin? What kind of effects could a second wave have on the cryptocurrency markets? If the crypto markets haven’t broken free from the habit of short term correlation with the legacy markets, then we can expect a hard but short contraction.
The crypto markets generally become more volatile before an energetic bullish period, however, these short term events that cause price adjustments are not a big cause for concern as there are a few positive macro trends which are likely to win out in the long term.
Bitcoin: A Store of Value?
BTC (and the marketplace it birthed) has proven to be a good place to park your value despite record breaking economic downturns as it has bounced back faster and higher than anything else the markets have to offer.
Bitcoin meets most of the criteria for a store of value, with the one caveat being that it may not meet the criteria of being “predictably useful when retrieved,” at least not in the current market’s level of maturity. Taking the long view, BTC has proven to be a tremendous store of value albeit only for anyone capable of riding out the 2+ year long bear market season BTC’s natural market cycle is known for.
Therefore, given current market conditions, and taking into account where BTC is in its market cycle, BTC will likely come out as one of the best stores of value any market has to offer. I fully expect many down market crypto options to outperform BTC during this building bullish wave of new money and new interest.
More importantly, BTC is in the “fun” phase of its four-year cycle, where steady gains simply become part of the new normal. Nothing has yet proven to derail this larger cycle, not even the kind of global market instability we can expect from a second peak in COVID-19 related deaths.
A Stimulus for Bitcoin
If the last $1,200 USD stimulus check was any indication, we can expect anyone - who is in a position to - to look for ways to invest their incoming stimulus checks. The sudden rise in exactly $1,200 USD purchases on Coinbase after the last stimulus distribution indicates that Bitcoin was on the menu for at least some of us and I’m happy that more US consumers will be granted the opportunity to buy BTC at one of the most opportune times to do so in its overall cycle.
"...given current market conditions, and taking into account where BTC is in its market cycle, BTC will likely come out as one of the best stores of value any market has to offer"
Time for a Radical Alternative Solution
The broader economy is likely to continue to be devastated by the lockdown extensions and trade friction that a second Coronavirus wave will cause. I suspect we will be discussing the impact of this coming phase of the global market for years to come, but the good news is that it has opened a dialogue for radical, alternative solutions to the very real problems baked in to our entire socio-economic model that the lockdown has made all too visceral for billions of people.
EDWARD DELEON HICKMAN
CEO & Founder
