The price of Bitcoin has been affected by various factors caused by the pandemic situation. Similar to various industries, Bitcoin was also affected in March 2020 due to lockdowns and travel restrictions. However, the good thing is that this effect did not last long eventually.
During the pandemic period, there was an increase in the price of Bitcoin from $5,000 in the month of March, 20202 to more than $63,000 in the month of April next year. In the subsequent paragraphs, we have thrown light on how bitcoin was affected by Covid-19.
Shift toward digitalization
It is a fact that curfews and lockdowns were implemented in many parts of the world for controlling the effects of the virus. In spite of having different types of negative effects, this particular move has resulted in a shift toward digitalization. Although working remotely has been quite common during the pre-Covid period, the usage of digital technology was enhanced by the pandemic. There has been an increment in the adoption of remote financial services right now with the shifting of individuals toward the digital world. This, in turn, has enhanced Bitcoin adoption. You simply require a stable Internet connection for purchasing and selling Bitcoin and you can make global transactions with Bitcoin at less transaction fee.
Effects on conventional banking
It is a fact that financial institutions have been forced by the coronavirus to shut down. With the decline of conventional banking at present, the majority of the folks were forced to look for financial alternatives besides the physical brick-and-mortar banks. Individuals who like to shift from decentralized banking systems have the option of Bitcoin at their disposal. For example, one does not need a bank account for purchasing goods and services with Bitcoin.
Hedge on price rises
The government has been forced by the effects of the pandemic to offer stimulus packages for keeping the economy afloat. Moreover, more money was printed by central banks which resulted in inflation impacting the buying power of people.
Bitcoin has become a favorite store of value in light of this inflation risk. Digital currencies are likewise viewed by the central banks as the future. For example, the Russian and Chinese governments are planning to introduce CBDCs (central bank digital currencies).
Simplicity of investment
It is a fact that investors want to diversify their portfolios since the pandemic has adversely affected so many investments at present. Investment in Bitcoin happens to be a fantastic investment option thanks to its digital character. According to the investors, people can consider this currency as long term investment. As a result, the price has been pushed to new highs.
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Enhancement of Bitcoin
There has been an increase in the demand for Bitcoin at present, and companies who are dealing with it have enhanced their operations technology. At present, the transaction system has become seamless as well as fast. Bitcoin mining methods have become amongst the most significant concerns right now. These mining methods have been linked with carbon emissions. Nevertheless, miners tend to move in the direction of green options like solar-powered and hydroelectric approaches.
Safe refuge for investors
Following the pandemic outbreak, Bitcoin is turning out to be a safe option for investors. Although it was affected by the pandemic initially, it has come back to record high prices. During the pandemic, Bitcoin has succeeded in gaining value which has made it an appropriate haven for investors. Even, many people have lost their jobs in pandemic, and they have earned a huge return from their bitcoin investment.
The price of Bitcoin plummets amidst fears of the new omicron variant
The discovery of a new coronavirus variant known as omicron has resulted in the tumbling of the price of Bitcoin by approximately 8% in recent times. Bitcoin, which happens to be the most popular cryptocurrency, dropped by 7.8% to $54,377. It was heading for its most significant one-day drop since 20th September. At present, Bitcoin is down 20% from an all-time high of approximately $69,000 that it hit at the beginning of this month.
The increment in infections in combination with omicron has resulted in fresh lockdown restrictions that have proved to be quite hurting for the economies.