Bitcoin hasn’t been experiencing much in terms of price volatility in the last two months. Historically the price range has been more volatile and it seems like there isn’t much enthusiasm among the investors to invest right now. There is still however a strong possibility that the Coronavirus complications around the globe could lead to a boom.
Analysts suggest that a new rise in the registered cases of coronavirus, followed by some emergency measures by the authorities can be the basis of a new rally of the Bitcoin price. A few days ago, the International Monetary Fund (IMF) predicted that the global economy will shrink by 4,9% in 2020. Just in April, the predictions were about 3%. On Sunday, world-wide confirmed deaths by the COVID-19 were about half a million. In many states, including Texas and Florida, there are already new measures in place to quell the continuously growing spread of the disease. The World Health Organisation also acknowledged that the worst is yet to come.
In contrast to the Bitcoin stalemate, on the US markets, the volatility is on the rise. The S&P 500 Index is lagging by 10% from its record hights in February this year. In the meantime, Bitcoin has been stuck in the narrow range of $8,000 and $10,000 since late April. The performance of the cryptocurrency is rather apathetic given that recently it has undergone halving and was expected to become more expensive as a result.
Experts at Bitwise Asset Management, the first cryptocurrency index fund, believe that there are further stimulus packages, that are being prepared by governments and central banks, necessary to tackle a potentially deeper economic decline. This could help drive Bitcoin up, since the supply of the cryptocurrency is capped at 21 million. This is also why it is widely regarded as digital gold – it is steadfast in the face of inflation.
Matthew Hougan, who is Global Head of Research at Bitwise, stated in the recent monthly investment newsletter of the fund that Bitcoin haves what it takes to reach $50,000. This is inevitable if the market capitalization of the cryptocurrency reaches 10% of that gold has world-wide. Which is around $9 trillion. It’s not a matter of if, but when, Hougan argues.
With major investors still waiting for a price rally, the markets should be closely monitored for signs of price spike.
