Bitcoins have been growing in value during the COVID-19 pandemic. The speculation is if the bitcoin will get weaker as the pandemic continues, or will it continue to grow?
If there is one thing the financial markets don’t like, it’s uncertainty, which was what was given to the markets during 2020 and 2021. Not only did the coronavirus cause coughs and death. It also impacted the financial markets looking into an unpredictable future, where people couldn’t go to work, it was getting difficult to deliver products, and many people lost their jobs.
But that is not the story for bitcoins, which went through the glass roof and hit record high values that people would only dream about before the pandemic. As the world was going into a new decade on New Year’s Eve 2019, the price for a single bitcoin was a little more than 7,000 dollars. In March 2020, the price cracked down towards a value of around 5,000 dollars but quickly regained its strength, and in 2021 it hit record high rates above 67,000 dollars. The rate is changing day by day so keep track of crypto news at https://cryptomeister.com/.
Raising demand for limited bitcoins
The pandemic was the oxygen needed for bitcoin to grow in strength, and now the speculation is if bitcoin will stay up in the high values. The reason why bitcoins suddenly got valued this high comes in the technology behind the bitcoin coding. When bitcoins was introduced in 2009, it already had a code that set an upper limit for having many bitcoins in circulation. That limit was 21 million bitcoins and had for a long time been close to being mined.
So, now bitcoins are a limited resource, and when the demand for limited resources is rising, so is the value of this resource. Therefore, bitcoin hit record-high rates.
During the pandemic, the financial markets got shaky, making investors with considerable sums of money nervous. Often a financial crisis will cause more money to go into circulation through loans. This leads to inflation, and money will lose its value. Therefore, investors bought bitcoins since no more coins would be put into circulation.
Will the bitcoin drop or rise throughout the coronavirus pandemic?
It isn’t easy to predict. The day after the news of a new mutation of the coronavirus named ‘Omicron’ was detected in South Africa, Botswana, and Hong Kong, hit the global media like CNN; the stock markets reacted negatively. The threat of new pandemic waves based on a mutated virus more resistant to vaccines made the markets shiver after they put trust in vaccines would be the key to handling the pandemic.
Bitcoins also dropped the morning after the news about the virus variation that was identified in South African. In just 12 hours, it dropped from 59,000 dollars for a bitcoin and down below a value of 54,000 dollars. But if the mutated virus would keep the pandemic ongoing and let inflation grow again, bitcoin could likely be viewed as a safe haven once again and boost the demand for limited bitcoins.
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Photo credit: The feature image has been done by Seng Kui Lim.
Editorial notice: Update November 30th, 2021 – We initially wrote that there is a total of 21 billion bitcoins available to be mined, but this is now corrected to 21 million bitcoins.