Posted 1 year ago | by Ben Armstrong
Is the COVID-19 Pandemic Behind the Rapid Drop in Token Prices?
The World Health Organization (WHO) officially classified the novel coronavirus which is sweeping across the planet as a pandemic. Tokens may provide safety in the long-term, but over the last week, the pandemic selling across asset classes has hammered on token prices.
The new coronavirus, officially named COVID-19, has caused the single fastest fall into a bear market for US equities in history, even with the big bounce they saw on Friday.
According to CNBC, WHO’s director-general, Dr. Tedros Adhanom Ghebreyesus, said this on the matter:
“In the past two weeks the number of cases outside China has increased thirteenfold and the number of affected countries has tripled....In the days and weeks ahead, we expect to see the number of cases, the number of deaths and the number of affected countries to climb even higher.”
The Pandemic is a Game Ender
Many people think that the use of Bitcoin and other digital currencies could help to stem the spread of COVID-19. Tokens remove the need to handle physical cash, which makes the spread of any virus or contagious disease far less likely to occur.
Cryptocurrencies are in no way like paper government debt notes, they are not carried from one person to the next, nor do they have a physical presence at all. The digital and decentralized nature of cryptocurrencies is rooted in the internet, where blockchain nodes allow the network to function.
The basis of decentralized systems eliminates the need for most people to interact on a physical basis, which is a major advantage. Too many systems that exist simply rely on a best-case-scenario to maintain functionality, which isn't always going to happen in the real world.
When things break down, there is little in the way of a Plan B.
The past month has been one of the most unusual times in the history of financial markets. There are so many oddities at the moment it is impossible to give a brief description of just how dangerous the situation actually is.
Needless to say, there is a massive political motivation to make established markets work, which isn't a backstop that crptos have. Over the next few months, anything could happen to the price of decentralized assets, including further steep declines.
Over the medium term, the outlook for tokens is much brighter. There is no way that global governments and central banks can use existing tools to combat the fallout from this pandemic, and new tools almost always means newly created money.
The existing system can't cope with the world that it has given rise to. There is way too much information, and no one needs governments in the way they did a century ago.
New ideas will be needed to maintain our global economy. There is a very good chance that decentralized assets will be a part of the next era in human existence, and the crisis prices that may emerge in the next few months will be seen as the buying opportunity of a lifetime.