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The drastic plunge has raised questions about Bitcoin (and other cryptos) viability as a stable asset and correlation to traditional markets. Changelly CEO Eric Benz has shared his views on this issue.
In a month that is usually remembered for the dramatics it delivers on the basketball court, thanks to the coronavirus and what seems to be a developing oil war, March madness has emerged in markets across the world. The U.S. and UK stock markets posted their worst losses for a single day since 2008, the price of crude oil plummeted and whole sectors of the European economy are on life support in the wake of a nation-wide Italian quarantine.
Cryptocurrency, which has at times been portrayed as something of a stone set in wavering seas, has been unsettled by the tide disrupting traditional markets and seen its own share of bloodletting. Last Friday Bitcoin was stable around the $9,000 point, but come Monday BTC had dropped by more than 10% to around $7,500.
There has been a slight recovery in the meantime, but the drastic plunge has raised questions about Bitcoin (and other cryptocurrencies’) viability as a stable asset and correlation to traditional markets. For some insider perspective on the whole situation, we reached out to Changelly crypto exchange CEO Eric Benz.
Although Benz has already touched on the coronavirus and its impact on the crypto industry before, the virus has taken on a new dimension now, as a veritable market and life-disrupting force. This time we started out by asking Benz how he thought the downturn would affect the general perception of Bitcoin as a means of payment and an investment option.
Although Benz acknowledges that the downturn was steep and sudden, he was quick to point out that:
“When looking at the entire timeline of Bitcoin we can see many different dips and spikes, when comparing Bitcoin to any other asset class, it is still the best performing asset over the previous decade. The knee-jerk reaction for many people looking at the 2,000 USD drop has been to panic and make uneducated claims that Bitcoin is not safe and never going to be used in mainstream business practices. But that’s really not the case.”
Benz continued by noting:
“The most beautiful thing about Bitcoin is that it doesn’t belong to anyone and is decentralized by nature, therefore removing any need for a central authority. Many people believe Bitcoin to be tied to global economics, but in actuality, it’s more complicated than that. Bitcoin’s price is not set by a central authority, therefore the price demand for Bitcoin comes directly from the people using it. If there is less of a demand for Bitcoin then the price will decline and vice versa.”
From there we moved on to discuss coronavirus, which has dominated discussions around the world in the past few weeks. Early on experts thought that COVID-19 would have a negligible effect on the cryptocurrency industry, and Bitcoin’s performance supported that line of thinking. However, this weekend that all seemed to change.
Benz’s take is that, as an asset traded by people, of course, Bitcoin — and other cryptocurrencies for that matter — is affected by things like the Coronavirus, which has had such a profound impact on life already. He went on to say:
“The virus has really hit the global economy and as a result has created a sense of fear and panic among everyday people. These are the same people who in turn help set the market rate for Bitcoin on a daily basis. As a result of many markets shutting down to safeguard against the virus, there have definitely been consequential blows felt in the crypto industry.”
However, for all the hand wringing and panic, Benz is still very bullish on crypto and Bitcoin in particular. He left us with this:
“I am a firm believer in the HODL strategy and if you got it, keep it — or at least keep a significant amount especially considering the network halving is fast approaching. Bitcoin might go down slightly more but I see the price having a very quick rebound.”
In the coming couple of weeks, we are going to learn a lot more about this disease and the ramifications it will entail for all economic activity. While there are certainly those who see dark clouds ahead for crypto and other sectors, Benz is hardly alone in seeing this downturn as temporary, even perhaps constituting an inroad for those waiting for an opportune time to enter the market.