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By the end of March of this year, investors everywhere had lost vast portions of their investment wealth as the COVID-19 took its toll on the world’s economies. As a case in point, the U.S. S&P 500 went from a high of 3,387 on February 19 to as low as 2,237 on March 23rd. That’s a drop of more than 33% in only one month, a drop that was surely devastating to investors who bought high and sold low.
While the jury is still out on how the pandemic affected it, the price of Bitcoin (BTC) seems to have followed a similar pattern. After hitting a 2020 high of 10,312 on February 14, trading to the selling side picked up, leading the price to fall all the way down to close at 5,012 on that same March 23rd date. It’s fair to say the story was quite similar for pretty much all cryptocurrencies.
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Things Are Recovering
All of the information listed above represents the bad news. The good news is most investment markets, not including real estate, have seen a strong recent recovery. Many of the world’s highest-profile stock markets have recovered and gained back much of its losses. For instance, the S&P 500 made a powerful move all the way up to the 3,122 level as of June 2, 2020. That’s only 7.8% off its all-time February high.
The bounce for Bitcoin has been even more dramatic. On June 1, the world’s most popular cryptocurrency managed to pierce the magical $10,000 level once again, hitting a second-quarter high of 10,187, essentially negating all of the coin’s prior losses.
It’s worth noting that cryptocurrencies have been historically more volatile than other types of investments. No one is claiming there is any kind of correlation between BTC and precious metals, stock markets, or any other kinds of investment. The fact all investments seemed to move in the same direction between February and the end of May was more of an indication that fear and panic buying did not discriminate. The recovery seems to have its root in the fact people have realized market fundamentals are still relevant.
What to Expect From the Crypto World Moving Forward
Volatility aside, the drastic drop in the stock market successfully shined a bright light on cryptos as a viable alternative investment option. This is great news for investors who are already invested in this space.
It’s important to remember that cryptocurrency is still a fairly new concept in the minds of 90% of the world’s population. With that said, investors are starting to dip their investment toes in the crypto market as they seek to learn about blockchain technology and the benefits of having access to a decentralized form of currency.
Yes, there are still concerns about using coins like BTC as a means of exchange between merchants and customers. The presumption is investors will eventually be able to overcome these concerns once they get more involved in the world of crypto. It’s truly is a matter of education of the masses. The notion fiat currencies could lose value at any time is creating some urgency to find alternatives.
The world may look back at this pandemic and realize it was the catalyst for introducing both investors and consumers to a new form of monetary exchange. When people get close enough to see what cryptocurrency is all about, they will likely realize the means of exchange issues will work themselves out as coins become more popular.
In the meantime, astute investors will appreciate that if nothing else, a well-backed cryptocurrency is a good store of value investment. After taking major hits in other markets, investors are certainly looking for new places to put their investment dollars. If all risks are the same, it’s better to look for higher potential returns.
How high can BTC and other coins realistically go? Experts are all over the boards on this one. Some experts believe BTC will hit $100,000 a coin at some time within the next few years. Other experts expect the coin to settle in the $20,000 to $50,000 range within that same time frame.
With any relatively new investment market, there is no historical data from which to make predictions. All guesses are more conjecture than anything else. Cryptos can certainly gain popularity by promoting the concept behind blockchain technology. Imagine how amazed people will be when they realize the endless applications of such technology.
For now, COVID-19 virus concerns are starting to dissipate. Very soon, investors who have money to invest will be looking at trading something that offers the potential of amazing returns. Here’s to thinking that the new light shown on the crypto market could point investors in that direction.
