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How COVID-19 Waves Hit the Crypto Shores?

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How COVID-19 Waves Hit the Crypto Shores?
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  • The COVID-19 crisis has changed the course of the economy to a drastic extent. Several industries, including the Crypto-Asset industry, were severely affected by the global pandemic.
  • The impact and the nuances of the same shall be discussed in detail and briefly in the article.

Dip in Prices

As soon as the pandemic took place, the risk assets started to go low. Meanwhile, stock markets were also impacted during this time, bringing the worst days to commodities and real estates. Crypto Asset was one of the casualties. 

The price of bitcoin went down to significant levels parallel to the stocks, with the majority of altcoins suffering the worst. Though crypto assets have managed to recover some of its losses, the drop in asset prices has affected the smaller projects in an unrecoverable manner. Generally, altcoin projects compensate their development through the process of the sale of their digital currency or token. The fact that bitcoin may be well-positioned to benefit from central bank cash injections and the zero-interest rates environment has nothing to do with vulnerable smaller cryptocurrency projects.

Capital Collapse

At the present moment, blockchain startups are now primarily focusing on VCs to raise funds after the ICO market collapse incident. However, the same has become more challenging in the last few weeks with the uncertainty in the atmosphere caused by the COVID-19 impact. Venture capital firms are investing in capital. However, the possibility of a direct face-to-face meeting is nearly impossible. 

Founder and CEO of market data provider Blockfacts, Gustav Christopher Wagner, stated in a recent interview that with the present situation on the run, meetings with potential investors have gone to video conferences, taking into account the physical impossibility of an “in-person” meeting. On the other hand, it is to be underlined that VCs are very much comfortable to have virtual meetings and also to close funding rounds. 

Crypto conferences go virtual

With the beginning of the pandemic, various National and International conferences that proposed to held at various locations were canceled. Though this might not affect the industry as a while, it will have a notable financial impact in the short-run. Those people who are still interested in participating in such conferences always have the option of a Virtual Conference. 

Remote working: A boon or a Burden?

On the bright side, remote working has been considered to be a viable option by many blockchain startups and crypto projects as a result of their distributed nature of work. In fact, when most of the industries are suffering throughout the crisis, it can be claimed that the crypto-asset sector is arguably one of the most appropriate and well-equipped industries to tackle effective communications across different time zones with maintaining productivity and managing teams simultaneously remotely.

Time for Stablecoins 

Keeping the above-mentioned factors apart, it is to note that the stablecoin usage rate has increased to notable levels during the recent weeks. According to reports, The two leading dollar-backed stablecoins Tether USD (USDT) and USD Coin (USDC) noticed to have seen substantial inflows. Adding on to that, even smaller coins, such as Binance USD (BUSD) and Paxos Standard (PAX), have also witnessed inflows and are noted to have moved up the digital asset rankings.

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