The impact of the COVID-19 outbreak on the global economy has already been drastic, and it is being predicted to lead towards a major recession once everything subsides. In the US, workers are being furloughed, and others stood down or simply made redundant at a time where the economy has essentially ground to a halt. This may create the need for Bitcoin owners to start cashing in their coins for cash.
The impact of the stay at home measures put in place globally is having dire consequences on a large portion of the population and according to cryptocurrency entrepreneur and Republican candidate for the House, David Gokhstein, this could lead to Bitcoiners being forced to sell their coins.
Bitcoin has long been seen as a store of value and an asset worth holding on to for long periods due to its mostly upward trajectory. ‘Hodlers,’ as people who hold onto Bitcoin as a store of value have come to be known, could reach a stage of desperation where the promise of additional gains does not outweigh the need for cash in hand during this financial crisis.
Bitcoin to the Rescue
Because Bitcoin was born out of a financial crisis, it has been viewed as a potential tool to help ride out the next impending disaster. Now that the crisis appears to be upon us, the role Bitcoin will play in this period may not be what was first predicted.
Bitcoin, intended to be a financial tool and currency, has moved away from that designation and has had less effort placed on its retail and point-of-sale adoption.
Therefore, its role as a tool to fight against the financial crisis may not end up being used as an alternative to fiat, but rather as a means to acquire more wealth in uncertain times.
Givers and Takers
The increased selling pressure for those seeking fiat for necessary means should not have a large impact on the Bitcoin market, however. According to Gokhstein, those who will be selling will see their coins picked up by those who have different agendas and circumstances.
There will likely be people in a position to buy Bitcoin who believe that the financial crisis is one that will do major damage to the economy, especially considering the Federal Reserve’s printing of trillions of dollars. Bitcoin may present an opportunity to invest in something that has, in the past, shown a negative correlation to stocks and the debasing of the dollar.