COVID-19 Market Climate Perfect Catalyst for Bitcoin Demand Says Binance.US CEO
The coronavirus panic-driven frenzy to acquire assets of lasting bona-fide value has put the traditional gold market to the test and may be creating the perfect catalyst for Bitcoin according to Binance.US CEO Catherine Coley.
COVID Grounds Gold
Gold is the world’s traditional safe-haven asset but according to a report by Bloomberg on March 26, the commodity is struggling under the combined weight of coronavirus fears and central bank money printing.
As the coronavirus has grounded most airlines and continues to wreak havoc on logistics and supply chains, moving physical bars of gold has become the challenge.
In the report, Vincent Tie, Sales Manager, Silver Bullion Pte Ltd was quoted saying “Since last week, face masks, hand sanitizers, toilet rolls, and bullion have something new in common – they run out when everyone tries to buy them."
Coronavirus may Create Perfect Climate for Bitcoin
After initially trading down heavily in correlation with equities and other risk-on assets, the price of gold has bounced back over 10% in the past week.
The price patterns of the traditional safe haven asset, since the markets began to crash, have resembled those of Bitcoin, which also fell precipitously before recovering.
Typically people buy gold futures due to the inconvenience of having gold bars physically delivered. But with a slowdown in the deliverability of gold bars due to airport disruption comes the risk that futures prices may rise excessively over gold prices.
The coronavirus pandemic is a black swan event and the entire global market is in new territory, but gold has not proven immune to that. However, many crypto industry insiders believe that cryptocurrency and Bitcoin have the potential to benefit.
The combination of the digital nature of Bitcoin, the search for value in the troubled markets and gold’s inability to effectively meet demand could be the catalyst that the original cryptocurrency needs, according to Catherine Coley the CEO of Binance.US.
Coley said, “Despite the market downturn, Binance.US is seeing unprecedented trading volumes, with especially active trading in Bitcoin. We are also seeing heightened interest in stablecoins as investors recognize the importance of hedging volatility during highly uncertain times.” She added, “ Bitcoin has always been built on the idea of a need to send and receive value in a safe and secure way and that’s not going anywhere.”
Coming Inflation Shock Will be Bitcoin's Safe Haven Catalyst
While we will have to wait and see if the confusion in the gold market brings the Bitcoin safe have narrative to fruition, recent research by BitMEX see Bitcoin achieving its potential during the times of shock inflation they have predicted will follow the central banks' stimulus packages and excessive currency creation.
The BitMEX Research published their analysis, Inflation is Coming, on March 17, outlining that the global response to the pandemic and disruption will, “mark a significant economic regime change from monetary policy to central bank funded fiscal expansion” from which intolerable market inflation will rise. It will be within this oncoming financial environment that Bitcoin’s true nature should finally be revealed.
The researchers claim that not only will inflation come, “it will be a shock” as inflation has been low and stable for 30 years and our collective memory does not nor recall the consequences of digging ourselves into such a financial hole. Although they do not specify exactly when the inflation will hit, BitMEX predicts it will be “similar to the 1970s where it went as high as 15%.”
The analysis by BitMEX’s research arm stated, “In our view, in this changed economic regime, where the economy and financial markets are set loose, with no significant anchor at all, not even inflation targeting, it could be the biggest opportunity Bitcoin has seen, in its short lifetime.”
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