As soon as the Covid-19 virus started spreading like wildfire, the world experienced a crucial period of economic crisis. The pandemic disrupted the everyday lives of all individuals around the globe damaging socio-economic growth. While the world was recovering from the disastrous impact of the first wave of Covid 19, the second wave arrived in a few months, causing further damages.
- The decline in GDP:
Before the appearance of the second wave of Covid 19, there was a 6% drop in GDP globally.
- As per the data provided by World Economic Outlook, the sudden fall in GDP was an alarming situation for the global market.
- The developed countries faced economic turbulence, and the lands were severely affected due to the unpredictable nature of the virus. Recovery from the collapsed financial state will take a larger amount of time.
- Covid-19 also had a significant impact on customer behaviour which further enhanced the fall in the GDP.
- All the cryptocurrencies were already in a delicate position, to begin with. The irregularities of the crypto markets increased because of the first wave. The unexpected second wave made this even worse. Trading cryptocurrencies can be difficult for beginners; click the https://allin1bitcoins.com/oil-profit/ to learn about online trading and the techniques.
- Cryptocurrencies like Bitcoin are famous for their excellent store of value. It is reliable for most customers because it can bounce back faster than any other digital currencies in the market.
- Although the crypto market faced a crucial time after the second wave of Covid-19, Bitcoin did not suffer constant price rises and falls.
- Fallout of the second wave on crypto prices:
The cryptocurrency market has gained enormous popularity in recent years. After the World Health Organization declared Covid 19 a pandemic, the crypto market lost almost half of its capitalization value by March 2020.
- Since the virus started spreading, the volatility in the crypto market skyrocketed. The prices kept rising and falling ever since the first wave of Covid, the second wave of Covid made it even worse.
- In fear of losing all the money, several investors decided to sell their coins. This sudden change in crypto exchanges affected the price of digital currencies.
- As a result of the complete lockdown, more people started getting interested in online trading.
- The pandemic had already cost people their livelihoods, the economy of the globe kept on degrading. People lost their jobs. To take care of the daily expenditures, they invested their savings into crypto trading.
- The price of digital assets was already high in January 2020 and was falling by February 2020. The value peaked during the first wave and was not regular till the end of it. The prices were lower at the onset of the second wave but soon went up with time and did not come back until the world’s situation was better.
- The value of Bitcoin, in general, has touched a new height since October 2020. It crossed $20,000 in December 2020 and reached $40,000 by January 2021. In February, it was $50,000, and now it is close to $54,000 globally.
- Factors contributing to price volatility:
- Digital payments – at the onset of the virus, the digital mode of payment increased. Due to such a shift in payment modes, the central authority of several nations decided to develop authorized digital tokens for its clients.
- Dynamic growth – digital assets have gained massive popularity in the past years. Several sectors and operating systems utilize them because of their advantages. Digital currencies are like a safety net against inflation in conventional society. The financial state of several nations might improve due to digital currencies.
Conclusion:
The value of cryptocurrencies went up during the second wave of Covid 19. The shift from conventional currencies to digital currencies during the pandemic has contributed significantly to its volatility.