Financial markets around the globe have taken a considerable blow in response to the COVID-19 pandemic. Amid the coronavirus outbreak that continued to uproot traditional stocks and assets, Bitcoin has only proven to be resilient during these unpredictable times.
Is Bitcoin a feasible investment option during the pandemic? Here are five reasons to start bumping up Bitcoin Investment on your 2020 to-do list.
- Interest and Market Potential is Rising
According to a survey conducted by Grayscale Investments and 8 Acre Perspective, more than half of U.S. investors (55%) are inclined to start investing in Bitcoin during the COVID-19 pandemic. This would translate to a potential U.S. market of 32 million Bitcoin Investor Households.
Among those who reported investing in Bitcoin, 83% have made investments within the last year, while 38% invested in Bitcoin between June 26 and July 12. This period was when global lockdown and social distancing regulations were initially enforced. Bitcoin practically does not correlate to traditional markets and institutions. Since this is the case, investors believe that Bitcoin and other cryptocurrencies will remain resilient to inflation despite governments printing money at full swing.
2. Financial Experts are Vouching for Bitcoin Investment
Wall Street has taken the crypto path. JPMorgan Chase, the largest bank in the U.S. by total assets, recognizes that the cryptocurrency market is starting to mature. This has allowed institutional investors to JPMorgan analysts note the considerable long-term potential Bitcoin has to offer. JPMorgan has also processed cryptocurrency transactions and has even offered banking services to leading U.S. crypto exchange platforms, Gemini and Coinbase.
Wall Street legends have also made headlines as they announce buying Bitcoin to hedge against the predicted inflation caused by the pandemic. Bitcoin is likened to the boom of the gold market in the 1970s. While experts have mentioned investing only a single-digit percentage, they also note the growing trust gained by the cryptocurrency as it survives the market. Big names under the investment industry are already converting at least a quarter of their wealth on Bitcoin investments. Some even note that Bitcoin may even outperform gold on the market.
Financial experts and analysts vouch that institutional investors believe in the potential of Bitcoin. This may be in part due to Paypal’s addition of bitcoin services, as well as JPMorgan’s unwavering bitcoin predictions, and the record inflows of Grayscale’s bitcoin and cryptocurrency funds.
According to the Grayscale Investments Q1 2020 Earnings report, capital inflows for cryptocurrency investment products totaled at $503.7 million, with $388.9 million going into the Grayscale Bitcoin Trust. 88% of all Bitcoin investments in the past quarter were made by institutional investors.
3. Bitcoin Proves Resilient against Pandemic
Since the initial dip in the global economy at the height of the pandemic in March, the Bitcoin value increased by 40%. Consequently, it is up by 24% since the beginning of the year. The Bitcoin technology and monetary system allow it to be immune to economic fluctuations. The logistical constraints put up due to the pandemic may even be favorable to cryptocurrencies, as transactions are online. Investors who hand over physical cash may just find themselves trading in a bitcoin or two over the many available online platforms.
According to a report published by Coinshare, Bitcoin was found to have outperformed a significant number of global assets. This has only encouraged investors to start converting their traditional assets into digital assets.
Coinshare also notes the initial March drop to have been due to the global panic concerning the pandemic. Though this is the case, Coinshare recognized that Bitcoin found a natural bottom, and was able to recover and normalize statistics in the following weeks. Coinshare emphasized that Bitcoin markets are admirable in that even without external intervention, the market is highly resilient and self-correcting.
In a stress-test report by JPMorgan, Bitcoin was found to have been a viable long- term investment class. While Bitcoin statistics dropped in March, it quickly bounced back faster than other assets.
4. Barriers for Entry are Close to None
Several brokers require a minimum capital outlay or put restrictions on the number of trades, so the next to none requirements for Bitcoin investment proves beneficial in this regard. Bitcoin allows investors to trade small amounts, even as low as a single share.
There are also no certificates or licenses required, such as with stock trading. Trading a bitcoin is simple– buy or sell a bitcoin, and save it up in your wallet. Bitcoin transactions and liquidation are also instant, unlike stock trading.
5. Buying Bitcoins is Minimalistic, Easy, and Consumer- Friendly
Platforms such as Skrillex, TradeStation, Coinbase, Circle, and eToro have made Bitcoins extremely accessible to the general public. Trading a bitcoin is made easy by applications and websites that cater specifically to the consumer, allowing cryptocurrencies to be traded with various currencies and deposit methods.
Numerous trading platforms and online brokerages allow Bitcoin to be a highly liquid investment. Bitcoin conversion to cash is instantaneous. This provides a more convenient and user-friendly advantage for traders and investors who wish to enter and exit a position quickly for more profit. The more liquid the market, the more stable it is in terms of an individual trade. High liquidity also makes bitcoin a feasible investment for short-term and long-term profit.
Should I Invest in Bitcoins?
Now we come to this looming question. Would Bitcoin investment be worth it during a global pandemic?
Bitcoin comes with the risk of its price volatility and policies outside government regulations, but it is one of the most liquid investment assets and it is relatively easy to control your position in this market.
If you decide to start investing in Bitcoins, keep in mind its high- risk, high reward portfolio. You might find yourself a millionaire, or an extremely vulnerable investor. Do understand that Bitcoin is a relatively new technology, and even financial analysts and experts say that they may be wrong. Bitcoins are slowly becoming mainstream, and its novelty creates unpredictable trends in price and volatility that is just what is needed to create opportunities for massive gains.
