The environment surrounding bitcoin and cryptocurrencies remains uncertain.
Is Bitcoin About to Be More Volatile Than Ever?
The global economy has taken several major hits over the past few months. The primary culprit is the ongoing coronavirus (COVID-19), which has led to a national shutdown in the United States and many other countries such as the United Kingdom, China, and South Korea. At the time of writing, several areas in the U.S. have rolled back on their opening strategies, with Texas, Arizona and California seeking to close bars and similar businesses to prevent further spreads.
The International Monetary Fund is suggesting that the global output of products and services will shrink by nearly five percent by the time 2021 is ready to ring in. This is worse that the mere three percent the agency was suggesting back in April. As a result of an increasingly unstable economic platform, the world is faced with further bitcoin volatility, which some analysts say could begin as early as July.
This volatility is not necessarily a bad thing. The term has often been associated with the speedy and massive drops that cryptocurrencies will induce, though it can also mean massive gains within relatively short periods as well, and this is what analysts see in the coming future. Some believe that the price of bitcoin could explode to $50,000 sooner than traders anticipate.
Arcane Research recently put out a statement mentioning that bitcoin and crypto won’t be the only assets affected by the coming COVID wave. It suggests the same volatility is likely to strike the stock market, and that the DOW, the Nasdaq, and the S&P 500 are all likely to experience major swings. The statement says:
With more uncertainty in the stock market again and a monthly close coming up, we may face increased volatility going into July.
One of the things that could potentially help bitcoin and its altcoin cousins is that the Fed keeps buying stocks, bonds, and other products as a means of keeping the U.S. economy at least marginally stable. U.S. President Donald Trump says he’s also favoring another stimulus round for American citizens that have been affected by the current pandemic.
With so much uncertainty and Steve Mnuchin’s words of a potential rebound later in the year appearing further and further from reality, many are turning to bitcoin as a means of hedging their wealth and protecting themselves against inflation and other economic scares. Crypto investment firm Arca explained in a newsletter to its clients recently:
The Fed is buying everything that isn’t nailed down. Naturally, even the most bullish investors remain somewhat cautious regarding when all of this unwinds.
At press time, one bitcoin is trading for just over $9,000, suggesting that the price of the asset has fallen by a few hundred dollars since the middle of last week.