Observing the economical ramifications of Coronavirus, the research arm of cryptocurrency exchange BitMEX has concluded that the pandemic is going to force unprecedented changes upon economic regimes. In this, however, BitMEX believes that Bitcoin (BTC) could truly thrive under these conditions.
One for the Books
As is commonly known by now, the stock/crypto market crash spurred on by Coronavirus has become a historical one, noted by BitMEX as one of the largest crashes next to the 2008 Global Financial Crisis, the 2000 Dotcom bubble, and even the Wall Street Crash of 1929.
Looking ahead, BitMEX treats this crash with a little more optimism thanks to the existence of Bitcoin. Noting that the value of BTC had dropped by just over 50%, BitMEX research seems to believe that even this incredibly volatile cryptocurrency can “shine” in the “inflationary aftermath of the response to the crash.”
It justifies this by going on to explain that traditional financial markets and economies overall are going to suffer, should the economic landscape fail to adjust accordingly. BitMEX notes that previously, the response to the 2008 crash was to lower interest rates from 5.25% to 0.25%, and similarly the 2000 Dotcom bubble caused rates to drop from 6.5% to 1%.
The team at BitMEX Research writes:
“Federal Reserve policy is based on models which assumes that monetary policy does not impact the structure of the economy, instead it just eases the flow in which money flows through the system. However, in our view, policy has become so extreme that this is no longer the case. Federal Reserve policy has become the primary driver of change in the structure of the economy.”
“Whatever one’s view of monetary policy, now there can be little doubt, the current system cannot take another crisis. It is time for a change.”
A Moment for Bitcoin
Due to people being unable to work in certain environments, curfews and other national decrees in place, it is only natural that governments will be under severe pressure from the public who may find themselves unable to pay rent or have enough resources to weather the storm. “The inflation shock”, as BitMEX puts it, could be the secondary trigger for the impending economic downturn.
The sharp decline in businesses being able to trade, industries coming to a standstill and staff layoffs will require a lot of care and attention from governments, which may barely scratch the surface for many populations. Without proper compensation for loss of business and work, inflation and national fiat currencies potentially weakening in the wake of Coronavirus, Bitcoin may be a safe haven asset should matters get out of hand, much as they did in Venezuela.
The exchange predicts that the world may be headed toward an era of inflation akin to the 1970s, when volatile inflation hit highs of 15%. Though, BitMEX expects that economic regime changes as a result of the Coronavirus issue could prove