About two days after the WHO officially declared Coronavirus a pandemic, searches for “buy Bitcoin” more than doubled.
When In Doubt, Buy Bitcoin
Many new investors may have been scared off by the plunging market, wondering whether this thing can actually be a hedge against the rest of the crazy market. But those who did buy that day, if they bought the bottom (almost as low as $4,100 that day), they’ve nearly doubled their investment by now. Of course, it’s difficult to get up and running on an exchange, along with bank account and such, in a day.
It would seem we can therefore thank coronavirus for one thing: there are new Bitcoiners, spurred into action as a result of changing external events.
Said events may be unique, but they demonstrate one thing: in times of distress, people quickly lose faith in fiat currency.
To be fair, the same might be said of Bitcoin, but there’s a lot that goes into that. To make the statement about fiat, we look to the evidence that on March 13th, searches greatly spiked for “buy Bitcoin.” Look at the chart below.
Bitcoin’s Levers of Power
To make a similar statement about Bitcoin is more difficult. You can’t rely strictly on the price. People aren’t losing interest in Bitcoin just because the price goes down, no matter how much it is. They also aren’t necessarily losing faith. Unlike the dollar, which trades in a more complex environment but still has seen its value debased against other fiat currencies and certainly against cryptocurrency, Bitcoin is traded as an asset, more like a stock than a currency.
Thus in many cases the same people that dumped the stock market are dumping Bitcoin, not retail investors and certainly not new users.
It’s like a majority of Bitcoin users are subject to the whims of a few who may not even actually use the currency. But that’s the nature of the thing. If you ask me, firms like BitMEX and Bitfinex are the most influential when it comes to the BTC price.
But that’s not so different from the fiat economy, now is it? Less than 1000 people just decided in America, for example, to print up almost 10% of the country’s GDP. The majority of the funds do nothing for everyday Americans, who will be paying for the “stimulus package” for decades. The Senate voted 96-0, while the House of Representatives used an unrecorded voice vote – meaning Americans won’t even know who to hold responsible down the road.
The world is a vampire, but even it is scared of politicians who break into the money printer control room.
Which is why we’re probably dealing with a much more diverse and populated Bitcoin marketplace, with a whole new class of “noobs.” The more interesting question is how many of these “noobs” will stick around and eventually help build out the Bitcoin economy.