Should you Buy or Sell Bitcoin (or cryptocurrency) in the wake of Covid-19?29.02.2020, 10:23
You might be someone invested in crypto, tracking the likes of Bitcoin and Ethereum, and surveying prices with interest where all markets are currently quaking. You may be equally keen to snap more up if prices go low. [Here at PrizesDrop.com, we’ve written posts previously about the continued fascination and value of crypto, and what you can do with it.]
As expected, stocks and shares have taken a hit due to concerns over the global economy and supply chains being affected by the continued spread of Covid-19, a new coronavirus.
Should you swap your investments now only for Bitcoin, or wait longer? Should you sell all your Bitcoin into fiat currency or stablecoins (like Dai or Tether?) What will happen to the price of Bitcoin now it faces the test of large, economic, semi-'black swan' event?
Is Bitcoin and cryptocurrency ready for such a test? All interesting questions, but the safest answer is... no, it isn't. Not really.
The network may be as robust as ever, with the store-of-value proposition better than transacting on it regularly (where fees may still become high with increased congestion). However, the fact is that any recession would affect the much-needed flow of investment and interest into the space, interrupting bullish sentiment - with the expectancy for continued development - that has surrounded crypto since January. So in time, there may be a substantial drop in time, even with good old bitcoin.
That being said, the price of bitcoin has seen a correlation with gold, and it’s likely that where altcoins will suffer as usual, bitcoin will fare much better. Indeed, there’ll be many who will buy bitcoin over many other assets; they won’t miss the chance to accumulate.
And interestingly, there have recently been strong altcoin projects such as Tezos (XTZ) and Chainlink (LINK) that has seen some resilience, and even increase. But can this really last in the troubling weeks ahead, and the duration of the virus lifespan, until it can be controlled or contained? We could see further disruption yet.
It’s possible you’ve already missed opportunities for getting out of some altcoin projects, and into bitcoin or stablecoin. Well, it’s time to reflect on those investments, and think long-term again. Besides, you can still earn staking rewards on some. Our advice is to adopt the usual long-term thinking, and 'hodl' on. Don’t lose your positions. It’s likely that with positive news and the warm weather coming, and hopefully a reduction in cases of the illness, that the market will jump back with some force. This after all, was set to be an interesting year for both Bitcoin and Ethereum, but for the latter, much-needed development could be a little slowed. The question is one of time and duration.
But despite this, it’s always wise to have a portion of stablecoin or bitcoin to hand, to jump in a little on major projects when prices are low, and the lights change green and more positive sentiment returns once more. But like always, buy or spend that bitcoin wisely.
What else to add? Well, you could say that markets always benefit from a good rattling (speeding up damage to the less vital, substantial projects), but not a major or sustained one. It could be an opportunity to find well-supported cryptos proving their use or value, and learning why.
People working from home or self-isolating over illness concerns may just seize the chance to learn more about bitcoin and cryptocurrency, or even blockchain development itself. Investing in knowledge can be far more valuable than investing in speculation.
Note: If the price of Ethereum drops then crypto-art (NFTs) will at least be cheaper. It’s another chance to browse collections on Makersplace and invest in rare digital art (see our previous post about how to tokenise your art).
As ever, markets, especially an infant one such as crypto and blockchain, are unpredictable. Where volatility has been the hallmark of crypto, where projects struggle to find their correct valuation, bitcoin has always been the more stable (and produced the most long-term gains to those who entered at the 'right' time).
Anything can happen, and hodlers could even see surprising gains, where traditional stocks and markets tumble. It's something to watch until coronavirus Covid-19 can be controlled, better understood and a vaccine emerges.
Meanwhile, here at Prizes Drop, you can earn free Bitcoin or Ethereum by accumulating enough of our website points, and exchanging them. As a member you earn our points simply by completing various tasks, watching ads or completing quick surveys.
Sign up today, get access to your dashboard, and start earning!
Disclaimer: not professional financial advice. Always do your own research.