Things are pretty bad in the American economy right now. States across the country have shut down “non-essential” businesses. People are being ordered to stay home, and unable to work. Certain home goods, like toilet paper, are in short supply. Some markets across the country have been wiped clean of most everything.
Coronavirus Economics
The stock market has responded by dropping a shocking 35% and then rebounding a little bit on news of a bailout from the government.
The government has responded by passing a multi-trillion-dollar spending package that includes checks for every American. Bitcoin has responded by shedding thousands of dollars off its unit price. It’s made us wonder if it’s a hedge against things like Coronavirus. One trader believes that the current situation, following a major dump, will lead to a massive “moon” event.
Whatever the outcome, as I’ve said before, Coronavirus has given Bitcoin a chance to outline its benefits compared to fiat currency. But one CoinDesk writer argues that things simply haven’t gotten bad enough for Bitcoin to shine. Byrne Hobart writes, in part:
One interpretation of bitcoin’s price performance during the COVID-19 crisis is that it wasn’t such a safe haven after all. But another is that it’s not the safe haven for this particular kind of crisis.
Still, as pundit Larry Cermak points out, the crisis has coincided with a massive downturn in the financial markets. Bitcoin has responded in kind, dropping over 30% in no time flat.
This is one of the best bagholder articles I've ever seen. "It's not yet acting as a safe haven because the crisis isn't bad enough yet" LMAOOO. Stock market just crashed by 35% in three weeks, which is the sharpest drop in history but not yet bad enough apparently pic.twitter.com/J1Ogu7ClNO
— Larry Cermak (@lawmaster) March 27, 2020
Hobart can say that this just isn’t Bitcoin’s kind of crisis, but the reality is that this crisis has affected every part of the economy. At least in America, where I’m based, the effects are visible – roads are empty, stores are dark, and panic buying is rampant.
What Is Bitcoin’s Kind of Crisis?
This is the point at which people should start thinking about Bitcoin, as the government prints trillions of dollars in an effort to rescue us from its own inept lack of preparation.
Meanwhile, essential goods like toilet paper and masks are in short supply, and it’s rumored that the government is actually making it harder for those things to be brought to market.
There's 35% crash and then there's the brief period bof MadMax before the citadels. We still at the 35% crash period.
— Henrik Andersson (@ha1331) March 27, 2020
The effects of Coronavirus on the economy cannot be understated. It’s not just scared traders. Government orders for businesses to shut down, and businesses shutting down of their own volition, means people will be unable to work. This means that unemployment will rise, and the total cost of the public health crisis to the American taxpayer is unknown.
If you thought we were in debt before, wait until after this crisis is over.
To argue that because it’s the kind of thing that’s just going to get better, therefore the virus is simply not bad enough for Bitcoin, is to put blinders on. I have to agree with Larry Cermak here.
But to think that Bitcoin will serve no purpose in a more severe crisis is also to have blinders on. There will come a time, and maybe sooner than later, when the dollar will have essentially no value, but things like cryptocurrency will retain their value.
