In The Wake of COVID-19 Pandemic, Does Bitcoin Still Qualify as a Safe Haven?

Amidst the global effects of CoronaVirus, Covid-19, the cryptocurrency market has failed to isolate itself from a worldwide crash across the financial markets. Some investors in crypto, especially those who are new in the market already feel disappointed. This disappointment stems from the fact that they believe that crypto should represent a safe haven that is insulated from the regular issues that affect other traditional markets.

Beginning with Bitcoin which dropped by over 50% within a short period of time, almost the entire crypto market experienced the kind of crash that happened in the traditional mainstream marketplace. Based on this development, questions have been raised as to the reputation of Bitcoin and other cryptocurrencies. People have also resuscitated the question of sustainability for the novel technology.

Covid-19 Hasn’t Spared Anyone

Far from Bitcoin and cryptocurrencies not living to expectations, there is a lot to learn and understand from the activities of the recent days. First of all, it is important to understand that Bitcoin and other cryptocurrencies still remain decentralized forms of asset and currencies. Apparently, during the isolated national economic challenges of different regions in the past, Bitcoin and crypto were not directly affected. Understandably, this is because of the cross-border characteristics of Bitcoin and crypto.

With the effects of Covid-19, the whole world has been roped in and no one is exempted. Therefore, it is normal to see Bitcoin react in similar ways to the older markets under such circumstances.

According to Roselyne Wanjiru, Chief Marketing Officer at Kesholabs Development Studio, the fact that the crypto market is yet to be divorced from fiat and human sentiment takes away from it being an investment safe haven for now. However, she acknowledges the global nature of Covid-19 as a reason why no investment instrument is spared this time around.

Wanjiru says;

The Covid-19 pandemic is a global black swan; those not infected are affected, and many people are keen on survival, not crypto, stocks, or investments… they’re looking at how long their cash at hand can take them


Human Sentiments is Playing a Key Role in the Markets

Wanjiru also notes critical concerns around gross human rights violations with people wondering whether they’ll live to the next month if Covid-19 hits close to home with hospitals being understaffed to handle it and people in some instances looking at death at home. “It is devastating; however, there is hope, she says. “Thing is, it needs to go as virally clear as the doom already in circulation”.

While crypto users and investors have panicked about the future of the technology, the question of sustainability has returned to the surface once again. There is the logical argument that supports a temporary setback, such as explained above. However, certain naysayers are claiming that the end is near for this emerging technology. This is a point that Ibemesi Charles, Founder of SPACCoin does not agree with.

The cryptocurrency market already posted some recovery at the time of writing. Bitcoin which slumped below the $5,000 level could be seen already trading above $6,000. This comes after China released some good news regarding the extent of progress that it has made in fighting the CoronaVirus. Perhaps, this has restored some hope in the markets as economic activities have resumed in the far-east country.

What we cannot ascertain at this point is how genuine this recovery might be, especially as other parts of the world are still struggling to contain the ongoing pandemic. States are shutting down and other major economies are going on recess.

What Should Be Expected From the Crypto Market?

According to Charles, the ongoing Covid-19 pandemic warrants the kind of reaction that we are seeing in the market. It makes the market quite volatile with a high level of uncertainty, especially for traders.

He says:

First, Blockchain and cryptocurrency isn’t going to crumble, but will definitely get hit big time and this will only last for a while. Remember, not just the crypto market is being affected but all markets globally. The world is currently in an ‘Economic War’ 

Charles notes that the market can go any direction because the entire crypto market is too tiny, and Billions of banknotes are being printed. He explains that we are likely going to see more uncertainty in the markets in the near future.

While Charles does not see the current occurrences as ideal indices to measure the pulse of the market, he is less optimistic about a market recovery for cryptocurrencies any time soon.

“Expect more crashes in price”, he says. 

Charles describes the current market environment as a storm that should be navigated by experienced traders only. For anyone who panics while trading, he advises a “stay of execution”. However, for anyone who is confident enough to engage the market, he encourages them to “romance the storm”.

Get Educated and Retain Control

Bitcoin and cryptocurrencies have not changed their characteristics. It is only expedient for users to understand the fundamentals of the technology and its inherent functionalities. This is only possible through proper knowledge acquisition and adequate exposure to the marketplace.

To this effect, proper crypto education remains the ideal way to remain in control as you venture into the cryptocurrency industry. Perhaps, this may serve as the ultimate protector for any investor who considers Bitcoin and cryptocurrency as an option for investment, or even a safe haven.


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