After living through the frothy 2017 crypto apocalypse, can Bitcoin survive COVID-19 economic fallout? Bitcoin has fallen more than 65 percent from its all-time high of $20,000. The last year has been quite brutal in terms of loss in value, and the crypto industry is going through rough times.
So, why is it that Bitcoin is still seen as a savior in the current financially-perilous times? And can Bitcoin survive COVID-19 pandemic? That’s because it is this decade’s most valued asset and survived its first-ever crash fairly well.
Bitcoin promises more than just the monetary value it represents – it is an idea. It shows what people can do when they are determined to shed the traditional financial systems and adopt a whole new decentralized approach to asset creation. In essence, it is a new way to perceive money and achieve financial independence.
Can Bitcoin survive COVID-19 economic upheaval
The world has arrived at a precipice – a potential economic fallout more significant than the 2008 financial rout. The ever-rising global debt of governments is spiraling out of control. Excessive money is being pumped by central banks across the world to keep financial markets afloat. To prop up the illusionary sense of societal well-being, governments are spending beyond their means.
Drying tax revenues, failing businesses, declining quarterly results, and massive unemployment rates are all swept underneath a colossal rug made up of debt money and sewn by central banks. Government debt stood at $30 trillion in 2007 and has since ballooned to touch $70 trillion today.
— Debt To The Penny (@DebtToThePenny) April 16, 2020
What’s frightening is that this figure may soon touch infinity if central banks don’t stop their eternal printing machines. Unfortunately, the COVID-19 outbreak has accelerated the trend of rising government debt exponentially.
Governments have opened their purse strings to tide over the economic impact of Coronavirus. And in doing so, they have touched stratospheric levels of U.S. government debt. Remember, the upcoming generations will have to pay for the $1,200 cheques being doled out today. So, where does the buck stop?
Bitcoin is the antidote to spiraling government debt
But why are we discussing Bitcoin in today’s fragile economic environment? Because a well-built cryptocurrency can be the perfect solution to this human-made financial crisis. The super debt cycle will invariably give way to a robust, accountable, and independent financial system. Here are some possible scenarios which can play out well for Bitcoin.
- Governments may try to resolve the vicious debt supercycle by inflating the money supply. Subsequently, the underlying value of the government’s debt payments will decrease. The resultant hyper-inflation will boost the value of scarce assets like Bitcoin and Gold. Since BTC is decentralized, its demand can increase manifold.
- Destabilizing monetary policies may trigger deflation, which can, conversely, increase the value of government debt to unsustainable levels. Insolvency can force the government to default on its loans. Subsequent government fallouts can trigger an overwhelming interest in rare assets such as Bitcoin.
Simplifying scenarios is easy – the actual events may be starkly different. But arguably, the global macro-economic landscape is ripe for a change. The ongoing crisis will also test Bitcoin’s limits and expose its various shortcomings as well. So, can Bitcoin survive COVID-19 impact? Compared to conventional assets like fiat and debt, it is definitely well-positioned to survive the upcoming economic fallout.