These Are 5 Lessons to Learn about the Financial Marketplace and Crypto from the Lingering COVID-19 Outbreak

The advent of COVID-19, since late December last year, led to a series of unfolding events in the global economy. The global lockdown employed to curb its spread has also led to the loss of millions of jobs, reduced production, low money flux, and a big bad hit on the financial sector.

The conventional finance sector is on a downturn with many investors responding by selling off their shares to either cut losses, save more money for the future, or prevent a catastrophe. Even the cryptocurrency sector, especially bitcoin that was believed to be a haven, has not been spared in this massive global sell-off.

The price of Bitcoin fell by a whopping 40 percent in March along with other risky assets that got tanked across the board. What can we learn from this doom that has befalling the finance sector? Is it a total evil, or is there an underlying treasure trove that only a few can see? Below are some of the lessons to learn from the effects of the COVID-19 on crypto and the financial marketplace.

1. Safe Haven

Up until now, crypto enthusiasts have always claimed that the innovation was meant for times like this. Some ardent crypto fans argue that it is a counter-cyclical store of value like gold, while some others argue that current crypto prices present a buying opportunity.

Though Bitcoin witnessed a sharp fall by about 57%, it has recovered almost 27 percent of that fall. According to the data on blockchain and cryptocurrency provided by analysts, Bitcoin is currently the best performing asset class in the last one year.

The data also shows that Bitcoin outperforms S&P, which is down by 14%; Gold by 21%; and Dow Jones, which is also down by 21 percent. This makes Bitcoin one of the most attractive assets to diversify a portfolio looking to hedge risk in the coming years.

2. Censorship-resistance

This is probably the most powerful innovative feature of crypto. Crypto is not necessarily a hedge against market collapse but it is a hedge over the widespread economic crisis that could lead to bank bail-ins, bank failures, or asset seizures.

This is because crypto is held in the personal wallet to which you hold the keys and thus giving you access to your money at any time.

3. Lower Prices, Less Capital

The coronavirus outbreak led to a sharp drop in risk assets as the stock market had some of its worst days more than in over a decade. Although crypto assets managed to recover some of their losses, the drop-in asset prices affected smaller projects the most.

4. Difficulty in raising capital

Due to the effective collapse of the ICO market, blockchain startups are now primarily looking towards VCs to raise funds. The situation is even more challenging because of the coronavirus outbreak and the uncertainties that come with it.

Although venture capital firms are still deploying capital, in-person meetings have become impossible, which has also made the scrutiny on business models to increase.

5. Remote Working

Working remotely is an advantage for the crypto community, mainly because of the decentralized nature. So, most crypto companies are unaffected or only slightly affected by the global lockdown to curtail the pandemic.