2020 ushered in waves of optimism and promising outlooks when the new year came in. This was especially true for the crypto market as digital currencies experienced notable increases in value.
Things Were Looking Up But Then COVID-19 Happened
The existing optimism was short-lived when the 2019 coronavirus, COVID-19, swept in towards the end of January and sent the industry into a downward spiral of fear and panic. The angst was palpable because this sharp change in direction came about just as top currencies were preparing to record significant price increases at the end of January 2020.
Their euphoria, however, failed to last as the reality of the pandemic dawned on the global population. With countries rushing into lockdown, and world leaders scrambling for answers, the panic found its way into the markets as well. The total market value of digital currencies started to decline and a wave of fear hit investors who were betting on big returns.
But, it’s important to note that the market downturn that ensued earlier in 2020 had more to do with the effects of the global pandemic than actual influences from the crypto industry itself. A CNBC report revealed that forex markets experienced volatile behavior as a result of the reining unpredictability of the pandemic.
Analysis from Gainsky further buttressed this discovery, highlighting the ravaging effect the 2019 coronavirus had on the world, its subsequent impact on international trends, and the introduction of a looming recession.
“In just a single five-week period, approximately 26 million Americans applied for unemployment benefits due to the unprecedented pandemic, causing a massive blow to the stability of the financial market,” says Robert Bentz, CEO of Gainsky, offering more perspective on the effect of the pandemic on major markets.
What Happened As a Result? Downturn, Panic, Fear. Drops In Market Value
The report further highlighted the great decline of the total market value of digital currencies, as it tumbled from US$308 billion on 14 February 2020 to less than US$118 billion on 12 March – creating room for panic for traders and investors alike.
Now, at first glance, it would appear that things in the crypto market were taking a turn for the worse. But seasoned crypto traders would know that the market is known to be volatile and downturns happen.
Even Though The Crypto Market Did Experience A Downturn, It’s Made A Significant Comeback
Business Insider reported a $13 billion growth in the crypto market, with top digital currencies such as bitcoin surpassing their January highs. At the time of this report, May 2020, the value of the market sat at $267 billion. As of September 8, 2020, CoinMarketCap recorded the total value of digital currencies as $322.79 billion – a major increase from May’s recording.
This shows us that though other industries like tourism and international travel are struggling to gain ground in the pandemic, the crypto industry is making notable progress. This upturn can be credited to the rise in the public interest where digital currencies and non-conventional trading as a result of the events that have unraveled in 2020. With a rise in unemployment, a pending recession, and a decline in trust in traditional structures (i.e. banking), people are looking for alternatives they can trust.
“As more and more people rely on the convenience of the internet,” Bentz remarked, “especially for continuous communication and transactions despite the difference in geographical locations, cryptocurrency trading is still flourishing.”
So, What Does That Mean For The Future of Crypto Traders?
The significant rise in market value for digital currencies has boosted confidence in the crypto industry, encouraging new players to give trading a chance. If there’s anything the last few months have shown the world, it’s to start paying attention to the digital world – as this is where the world may be headed.
This doesn’t mean novice traders need to rush into the market and attempt to trade on their own. Just as one would seek expert counsel on how to navigate forex trading, the same should be done for trading digital currencies. It is important that interested investors consult a reliable, experienced broker or firm before channeling their funds into a platform.