Even while the discovery of a new coronavirus variety, B.1.1.529, may have had a negative impact on Bitcoin (BTC), the world's most valuable digital currency, financial analysts predict that its worth will “double over the next 12 months.”
According to Nigel Green, chief executive and founder of deVere Group, the decline in the value of Bitcoin should be seen as a significant purchasing opportunity. Bitcoin dropped by more than 9% on Friday, bringing down smaller tokens with it.
More major investors are embracing cryptocurrencies, with many attracted to their alleged inflation-resistant characteristics. Bitcoin reached an all-time high of $69,000 earlier this month as more institutional investors welcomed cryptocurrencies.
Others have flocked to the digital token on the promise of rapid profits, a lure that has been heightened by historically low or negative interest rates, which have fueled the market.
The discovery of a novel coronavirus variety has sent global financial markets into a tailspin as it heralds the arrival of a new wave of uncertainty. The cryptocurrency markets have reacted in the same way as the rest of the financial markets.
This demonstrates how widespread digital assets have grown in recent years, as seen by the rising number of institutional investors who have flocked into Bitcoin in recent months.
As a result, when they temporarily cut their exposure to most risk-on assets, regardless of the longer-term prognosis, they also do the same with Bitcoin. As a result, owing to Bitcoin's massive market share, it has a negative impact on the whole crypto business.
As with gold, bitcoin is sometimes referred to as “digital gold” since, like the precious metal, it serves as a means of exchange, a unit of account, is non-sovereign, decentralized, rare, and serves as a store of value in addition to other functions.
Furthermore, according to the deVere CEO, investors will once again pay attention to the rising global inflation worries that are being fuelled by persistent supply-side difficulties.
Bitcoin is commonly viewed as a hedge against inflation, mostly due to its restricted supply, which is unaffected by fluctuations in its value. It is expected that the increased involvement from significant institutional investors, who will bring with them wealth, knowledge, and reputational pull – as well as further pushing up prices – will continue to bring growing investment to the crypto market.
The announcement of a novel coronavirus variety coming out of South Africa triggered a broad-based sell-off across asset classes, said Martha Reyes, head of research at digital asset primary brokerage and exchange BEQUANT, echoing similar thoughts.
If lockdowns do occur, which is not our base case scenario, this will result in an increase in helicopter money, which would eventually help digital assets.