The stock market continues on a roller coaster ride that leaves many sick to their stomach. One day it’s up. The next day it takes a tumble that rivals the stock market crash that led to the Great Depression. This has led to many investors looking at other opportunities, ones that have less volatility.
In fact, countless individuals today look to cryptocurrencies as an alternative to traditional currency and the stock market. Crypto.com, an exchange and payment provider, reports interest in cryptocurrencies has never been higher thanks to COVID-19. What are industry insiders seeing when it comes to this alternate currency?
Kris Marszalek, the co-founder and CEO of Crypto.com, spoke with CoinDesk and stated transaction volumes on the site more than doubled in the period between December and February. In addition, app downloads reached an all-time high during that time frame. One million users took advantage of the site’s platform last September. Since that time, growth continues in the double digits on a monthly basis.
Formerly known as Monaco, Crypto.com, a Hong Kong-based firm, supplies trading services through the company app. In addition, they supply businesses with crypto payment solutions that make use of a bank card powered by Visa. The initial coin offering (ICO) occurred in 2017 and raised $26.7 million. In 2018, the company name changed when the firm obtained the Crypto-com domain name, a purchase that set it back approximately $10 million according to reports.
Why This Growth Now?
Men and women may wonder why the cryptocurrency sector is currently experiencing robust growth. Marszalek believes this is a reaction to the drastic steps being taken by central banks across the globe that are looking to stabilize their financial markets. The United States Federal Reserve serves as a good example of these institutions and the measures that are putting into place to stabilize the market.
The Federal Reserve recently launched qualitative easing (QE) and is purchasing an unlimited number of mortgage-backed securities along with Treasury bills. The entity is doing so to prop up America’s financial system.
Qualitative easing concerns many, Marszalek explains. Digital assets interest many as they provide a potential hedge against any side effects that may result from QE. In addition, they offer a separate store of value, something many individuals are looking for today.
With so much uncertainty today, thanks to the coronavirus, one might expect investors would be hesitant to put their money into any vehicle. However, the Crypto.com platform continued to see retail investors even when the stock market appeared to be in a free fall. They viewed this as a buying opportunity. This isn’t the only sector that has witnessed interest over the past few weeks.
MyEtherWallet recently reported runaway volume during the coronavirus crisis. Brian Norton serves as COO for this platform and reports people are buying ether (ETH) at higher volumes than ever seen before. He goes on to say this level of volume has never been witnessed before, including during winter 2018 when the big crash occurred.
Catherine Coley, CEO of Binance.US, confirms this increase in trading volumes, stating the volumes are unprecedented. Stablecoins and Bitcoin appear to be the favorites on this site. According to Coley, the jump in this cryptocurrency indicates Bitcoin will survive without any help from a central government.
Precise numbers haven’t been provided by Crypto.com, but a spokesman for the company reports March 2020 witnessed trading volumes at levels three times higher than three months prior. February saw records broken, and March looked to be even better. This goes to show Crypto is ideal for this type of crisis, one the world has never experienced before.
Proving Warren Buffet Wrong
Three months ago, Warren Buffett, the billionaire investor, stated Bitcoin had no value. The current market proves how wrong he was when making the statement. In addition, he now says he can’t find attractive investments even as bargains are to be had due to the coronavirus and its impact on the worldwide economy.
Buffett recently opted to sell his entire stake in the U.S. airlines recently, and he may wish to use the funds from this sale to invest in Bitcoin. This cryptocurrency currently stands at around $8,870, up 23 percent this year alone. In contrast, the Standard & Poor’s 500 Index has dropped 12 percent this year. No company is immune, as shares in Buffett’s company Berkshire Hathaway are down 21 percent.
Dan Morehead, a professional crypto investor with Pantera Capital, recommends people reconsider cryptocurrency. He formerly worked at Goldman Sachs as a mortgage-bond trader. In addition, Morehead oversaw foreign-exchange options of Deutsche Bank in London at one time, and he headed macro trading for Tiger Management’s hedge fund. He decided to venture out on his own in 2013 and started Pantera as a Bitcoin investment firm.
Morehead acknowledges the dismal global outlook at this time. While there is a lot of confusion as to what the future holds, it’s clear that the pandemic has already taken a toll on the economy. Things likely won’t improve any time in the near future either, as people fear what will happen when the economy is allowed to open once again. Some experts feel it will rebound quickly, but others believe it may take an extended period of time to get the global economy back on its feet.
What this means is governments will continue to print money to keep their citizens afloat, and this leads to large deficits that must eventually be dealt with. While this frightens many, cryptocurrencies may be the salvation men and women are looking for.
Morehead explains the underlying blockchain’s quadrennial “halving” is happening. The rate at which the new supply comes in will be cut in half. Experts feel this serves as a bulwark against inflation.
The flood of the money coming in floats all boats, Morehead explains. This, in turn, leads to higher cryptocurrency prices.
The Future Looks Bleak
Experts predict unemployment could hit 20 percent for the month of April. This is the highest number seen since 1948, and many believe it could actually reach levels not seen since the Great Depression. At that time, the unemployment rate reached 24.9 percent.
The United States Treasury Department stated on May 4th that it would borrow $3 trillion during the second quarter. This is six times more than observed during the first quarter, and the funds will be used for emergency spending related to the pandemic. However, Congress continues to discuss additional spending measures, and the figure could actually end up being much higher.
Warren Buffett, when speaking at his company’s annual shareholder meeting last weekend, stated there could be extreme consequences if the Federal Reserve continues to prop up debt taken on by corporations, as reported by CNBC. The outcome cannot be known at this time, according to Buffett. The New York Times states he is not being optimistic or pessimistic. He is being a realist when he makes statements such as these.
Crypto investors appear to have their feet firmly in reality. Arca Funds, an investment firm focused on cryptocurrency, explains the markets and economy are being driven by “record monetary and fiscal stimulus.” The markets are on their side, the firm goes on to say, at this time.
Men and women often purchase stocks and bonds so they don’t have to think about their investments. They simply allow them to sit for an extended period of time and watch their dividends grow. However, that’s not happening now. These same individuals find they are carefully following the stock market and wondering whether their hard-earned money will be gone for good. If so much time and effort is being put into these investments to keep them afloat, why not think outside the box? Arca poses this question to investors who have been hesitant to look at cryptocurrencies up until now.
Although Buffett said in February that he owns no cryptocurrency and never will, that may change with this latest news. He has said he has $30 to $50 billion to spend on a special investment, and more investors are looking to Bitcoin as industry experts have been recommending it. Many are turning to xCoins to learn more about cryptocurrency and being investing in this asset.
Buffett’s investors might enjoy the dividends some anticipate seeing in the coming year, as Morehead has stated he believes Bitcoin prices could increase 13-fold over current levels during that time period. However, if Buffett puts his billions into this sector, prices would increase significantly, as the outstanding market value today is only roughly $163 billion.
Investors need to consider putting their funds into any vehicle that increases in value during the biggest crisis the world has seen in a century, Morehead announces. Buffett feels America will prevail as it has in the past. However, the country may do so thanks to those who do think outside of the box and look to alternatives to current monetary and financial systems, such as Bitcoin. This is something every man and woman needs to consider as they move forward after this pandemic.