The WoW Style

Introduction

Since bitcoins and most other cryptocurrencies have a history of being an independent way of saving and investing, several people around the world invested in the same. Also because the value of cryptocurrencies was not correlated to any of the traditional existing assets and had minimum interference or governance of any monetary policies, many investors found it as one of the safest areas of investment which is independent of the standard market risks involved in the share market. But Covid 19 has taken the form of a pandemic affecting every sector in the world. The economic and financial sectors have been affected negatively to a great extent. 

The surge in Bitcoins During Pandemic

The bitcoins have had a surged value during the pandemic situation. From being $7000 in January 2020, it had reached $17000 in November 2020. This was seen as a very steep rise in the value of bitcoins post the surge in 2017. Since the number of bitcoins is limited and are created only when the necessity arises, just like the currency of money, when the demand of bitcoins surge, there is an increase in value. Here are a few possible reasons that might have led to the increased demand and surge in the value of bitcoins:

• There were a great number of people who lost their jobs during the surge of the pandemic and announced global lockdown. This had forced people to probe into the ‘not-so-familiar world of cryptocurrencies just to invest their savings and increase the value of their traditionally saved assets. People have resorted to cryptocurrencies as a side income to keep body and soul together.
• Many relatives, family members and friends have helped people to understand and inspired them to probe into the world of cryptocurrencies as a safe place to invest during the pandemic.
• The standard monetary currency was printed all over the world owing to the pandemic and acute shortage of currency. This led to inflation in the financial market and the share markets were also wobbling and unsteady owing to this inflation. Therefore, people guide for bitcoin. To ensure stability and value for their money.
• The pandemic was like a long dark tunnel for which no one knew the end. Since bitcoins are seen mostly as long term investment, people considered it wise to invest in the same. Therefore there was a surge in demand leading to an increased value of bitcoins.

Decrease in Value of Bitcoins before Second Wave of Covid 19

Before the second wave had hit various parts of the globe, there was a surge in the value of Bitcoins due to increasing demand. But as the second wave has brought in more instability and degrowth in financial markets. People began to liquefy their investments in bitcoins to meet various other demands especially medical demands. Here are a few reasons why the value of bitcoins fell right after the commencement of the second wave of Covid 19:

• An increase in correlation with equity shares has led to a decrease in the value of the bitcoins. There was a sharp fall in the equity share values that could lead to losses during the end of March and early April 2021. To cover for the trailing margins in equity, many people had to liquefy their bitcoins. This led a lot of business tycoons to also liquefy their bitcoin values which led to a surge in supply, more than demand. Hence dwindling the value of Bitcoins.
• Due to the current pandemic situation, people are trying to make a living and need liquid assets and currency which are tangible. Investors hardly wanted to invest in the concepts of illiquid currency or digital gold. The prices of basics have shot up due to the inflation that has hit globally due to the pandemic. Therefore it is difficult for the value of bitcoins to surge immediately.

Conclusion

Both positive and negative effects of the pandemic have been traced in the value of bitcoins. The increase and decrease in demand and supply of bitcoins are the reasons for the spike or decrease in the value of bitcoins. Although there was an initial spike in the value of bitcoins, it later dwindled due to the lack of demand and liquefaction.