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2 March 2024
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In COVID-19’s Wake, the New Normal Creates Crypto Opportunities

The COVID-19 pandemic has been a challenge for everyone, but it has created many opportunities for us in the blockchain industry. In most industries, sales vectors are declining, as bankruptcies and layoffs rule the day. But companies in the crypto and blockchain space have been expanding, hiring and applying for new licenses. 

The pandemic has caused suffering in this industry, as in others, but the fundamentals of crypto are better than those of traditional financial markets. We will experience some reshuffling, but the crypto and blockchain industry will become stronger through this crisis. Newmarket participants are looking for derivative and margin products, and they’re increasingly looking to trade on their phones and mobile applications. 

A second wave

The next wave of COVID-19 would eviscerate new, underdeveloped companies. That’s why sustainability is very important. Soon, there will be a crash test not just for crypto players but for everyone. Those efficient companies will persist, however, and the industry may become stronger for it. 

Traditional investors fear whether a second wave will again plunge the traditional market into turmoil. In March, Bitcoin’s (BTC) price fell to approximately $3,000 and promptly rebounded to over $9,000, even briefly hitting $10,000. By regaining its pre-pandemic level, we see how Bitcoin bounced back a lot faster than other financial investments. I anticipate crypto prices to collapse and quickly rebound in the event of a second wave of COVID-19.

Crypto will continue to grow strong despite a global economic recession though many still suffer from COVID-19 and the effects of lockdown. In a global economic recession, individuals and institutions have been turning away from traditional assets and have been seeking opportunities in cryptocurrency.

Traditional and institutional to become more aggressive in crypto

Therefore, traditional investors will continue to turn toward crypto assets, especially family offices and asset management companies. The market will only mature, particularly initial exchange offerings, decentralized finance and traditional financial markets. We see traditional investors becoming more aggressive when investing in this space, as well as building incubators for blockchain projects. 

Multinational companies and even banks have set up new investment arms for blockchain technology and cryptocurrency, looking to diversify into these alternative assets. According to a recent Fidelity survey, 80% of institutional investors found digital assets appealing, while 60% of them have been proactively looking at Bitcoin as part of their usual portfolio investment. 

In the survey, 74% of United States institutional investors and 82% of European investors saw cryptocurrency as appealing. Meanwhile, 36% of institutional respondents were attracted to cryptocurrency because it is “uncorrelated to other asset classes,” and 34% were attracted by the innovative nature of the technology. And 33% liked the high upside potential. 

Commenting on the survey, Tom Jessop, the president of Fidelity Digital Assets, said: “These results confirm a trend we are seeing in the market towards greater interest in and acceptance of digital assets as a new investable asset class.” He also added:

“This is evident in the evolving composition of our client pipeline, which spans from crypto native funds to pensions.”

Work from home is an opportunity for crypto

The shift of offline business and physical activities to an online setting to crypto and blockchain startups. From here on out, we will see discussions and debates over cryptocurrency investment from billionaires and traditional investors. Whether they support it or not, they will keep a closer eye on crypto and blockchain technology. 

In the “new normal,” blockchain technology can be applied to the Internet of Things, medical systems, supply chains, and can be used for transparency in financial markets, charity and nongovernmental organizations. In Asian countries, for instance, little is known about how NGOs spend their money, and how many middlemen take a cut. 

Related: The Future of Philanthropy Lies in Blockchain Technology

Sometimes, only 10% of a donation reaches those who truly need it. If this process is put on a blockchain, then everything is on-chain and transparent. There is no black box, and we can track donations to ensure that they are going where they were initially intended to go. After companies adopt blockchain technology for these purposes, only then will they begin to discuss tokenization. 

For now, to be certain, most of the attention remains on Bitcoin. In a post-COVID-19 world, diversifying portfolios will become increasingly important, especially for asset management companies and banks. COVID-19, therefore, is an opportunity for crypto to penetrate new markets, to work with big banks and to attract mainstream investors.

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