Bitcoin price had reached $ 10,000 before the coronavirus outbreak broke out. But many crypto investors have this question in mind: Why couldn't Bitcoin be a safe haven between the turmoil in the traditional financial system?
Cryptocurrencies During the Financial Crisis
We all know that cryptocurrencies are not central. No government or financial institution can control the cryptocurrency market. Therefore, in cases such as financial crisis and economic turmoil, cryptocurrencies will be considered reliable because they are not controlled by any third party.
In the traditional monetary system, the Central Bank prints money and controls the total money supply within the country. The central bank can increase or decrease the money supply. The government takes action according to the state of the economy. For example, if there is a recession, the government encourages investors to invest more in different sectors of the country. So the government often acts to encourage investors and charges less tax. On the other hand, when the money supply rises, the government seeks to lower interest rates from people by trying to increase interest rates. All of these are good signs that the government controls and meets the needs of the people. But what happens if the government goes bankrupt?
www.buybitcoinworldwide.com / BTC price chart from 2012 to present
The answer is simple: How much money you have in your bank account means nothing other than paper.
Therefore, cryptocurrencies are a great tool for people who don't want to tell the government or other people how much money they have. Thanks to this feature, it has made the crypto currency very popular among people. Therefore, in the event of a coronavirus outbreak or financial recession, cryptocurrencies should function logically as a safe haven for investors.
How Coronavirus Affected Bitcoin Price?
Many investors and cryptocurrency enthusiasts believe that in the face of any financial crisis, cryptocurrencies will remain solid and always reliable. Since Bitcoin's general supply and demand is stable, there is no manipulation. From a historical perspective, we can see that Bitcoin and other cryptocurrencies are on the rise in the face of any financial uncertainty. For example, the Federal Reserve's injecting liquidity into the market is an indication that investors can invest in Bitcoin safely. Although the coronavirus is currently affecting Bitcoin, it is not unlikely that we will see its price rise above the $ 10,000 level again. According to the structure of the markets, the price of Bitcoin was supposed to go up during an economic crisis like the coronavirus outbreak created. So why did BTC fail below the $ 4000 level?
1. Coronavirus News
Bitcoin operates as a safe haven during global uncertainty. In 2020, Bitcoin was traded around $ 10,000. The reason behind this is that, as I mentioned above, investors invest in safe ports in times of global economic uncertainty, such as the Coronavirus. As China's economy weakened, investors turned to Bitcoin due to its safe harbor structure.
When the coronavirus outbreak began, the Chinese stock indices decreased by 9% and the Shanghai Composite Index by 8%. Meanwhile, Bitcoin's price went above $ 10,000, so investors had moved their money to the crypto markets.
