The world is currently battling a second wave of Covid-19 and countries like the United States are bearing the brunt of the pandemic.
Investors Become Wary Amid Renewed Uncertainty
With infections rising and gloomy outlooks for the global economy (especially as the UK and many other European countries re-enter lockdown), stock markets are beginning to cool off as investors once again become wary amid renewed uncertainty.
Seth Klarman: Investors Always Need A Strategy To Guide Them
"Many investors lack a strategy that equips them to deal with a rise in volatility and declining markets," Seth Klarman told his audience in a speech at MIT in 2012. Q3 2020 hedge fund letters, conferences and more Klarman was talking about the benefits of having a strategy, such as value investing, to provide a Read More
Just last month the S&P 500 had its worst week since March as reports of nearly two dozen states in America showed an increase of new Covid-19 cases.
Tech stocks also suffered from the uncertainty but have also been affected as CEOs of Twitter, Facebook and Alphabet testify before Congress as it considers amendments to Section 230 legislation, which protects social media platforms from legal liabilities.
It wasn’t just the S&P 500 but global equities in general that saw performance nosedive in October as coronavirus cases increased rapidly around the world.
It seems investors have few places to hide. Oil prices plummeted to a five-month low last month when countries like the UK, France, and Germany announced they were going into lockdown. According to one report, the price of Brent, which is the main benchmark for oil prices, is down 45% from the start of 2020.
Investing In Bitcoin As Safe-Haven Investments
With stocks and shares suffering such volatility, investors have turned to safe havens like gold. However, increasingly, cryptocurrencies - Bitcoin in particular - are now considered safe-haven investments too, while others believe they could provide a good hedge against inflation. This is because they are uncorrelated to any country, stock market, and company’s performance.
Some say that Bitcoin is considered a safe-haven because of its finite supply. Like gold, Bitcoin can’t be created out of thin air – it has to be mined. Gold is mined underground but digital currencies must be mined through computational means. Bitcoins are also deemed finite as there will only ever be 21 million of them produced and this has been set into the source code.
Investing in cryptocurrency is not a foolproof strategy. Bitcoin did experience a crash in March, but it has still been deemed the best performing asset of 2020. This is because in May it recovered enough to outpace gold, silver, and crude oil. Some believe that Bitcoin still has the potential to reach its historic high of nearly $20,000 that it achieved in December 2017.
While Bitcoin hasn’t yet achieved this target in 2020, in October alone, it enjoyed growth of 25.6%.
Cryptocurrencies are likely to gain even more interest and investment as delays, legal challenges, and a potentially explosive constitutional crisis in the world’s largest economy looms. Experts point out that this is because Bitcoin and other digital currencies can’t become ‘flapped’ by who wins the US elections.
Crypto ATMs And BTMs Installations
What’s fueling the interest of Bitcoin, and other leading digital currencies, is also their increasing accessibility - made possible by crypto ATMs. Installations of Bitcoin ATMs (BTMs) have accelerated and, as a result, more have been installed in the last few months than in the last five years combined.
In a recent online interview, Ben Weiss, COO of the largest Bitcoin ATM Operator, CoinFlip, stated that “people are looking at bitcoin as a safe-haven asset” when asked about the increasing demand of Bitcoin ATMs and the booming DeFi industry.
Back in September, Coin ATM Radar reported that BTM installations exceeded 10,000 locations across the globe. It highlighted that it took the industry seven years to reach this point since the first BTM was installed at the end of 2013. The pace of installations outstrips that of traditional ATMs which took nine years to reach the 10,000 mark back in the 1970s.
Companies like CoinFlip are helping to fuel this expansion. They have already placed 1,000 machines across the US and are supporting 10 other major cryptocurrencies including Litecoin, Ethereum, and Dash.
Other firms like Cryptospace and Bitnovo are also helping to create a booming industry through their provision of BTMs and online cash lounges that help to educate users about digital currencies and encourage their adoption.
PayPal's Announcement To Buy, Hold And Sell Cryptocurrency
Last month, payment system, PayPal, helped increase the ease of transacting digital assets by making it possible for its customers to buy and sell virtual currencies using its platform. PayPal added that this will ‘significantly increase cryptocurrency’s utility by making it available as a funding source for purchases at its 26 million merchants worldwide’. So why are BTMs and the DeFi industry booming now?
BTMs are easy and convenient. Like a normal ATM, BTMs are in easy to access places like convenience stores and malls. In a recent interview addressing accessibility to cryptocurrencies Coinflip’s Weiss stated that his company’s BTMs can be found in gas stations, corner stores, and convenient stores. So accessible has the BTM process become that bitcoin is often the first investment for many Americans who are excluded from the regular stock market process.
The volatility experienced in the markets is unlikely to subside in the near term. It will take a long time still before a Covid-19 vaccine is circulated and after the UK and various European countries exit their lockdowns there’s still the matter of Brexit and the problems associated with that to contend with.
The US elections (and any legal issue emanating from it) will hopefully be over by December, but Brexit along with U.S.-China trade tensions – set to continue regardless of who may be in power - could still attract retail as well as institutional investor interest in Bitcoin and other leading cryptocurrencies.
The Growth Trajectory For Bitcoin
This uncertainty, along with the increasing accessibility of Bitcoin through ATMs and online payment systems, like PayPal, could well ensure that the trajectory of growth for Bitcoin and other digital currencies continues upward for the rest of 2020 and even into 2021.
This is provided, of course, that regulations don’t prohibit expansion in the digital currency and crypto ATM sector in America.
As Weiss, points out on Markets Insider: “I haven’t heard any specific plans for Biden or anyone on Bitcoin regulation, but there needs to be sensible regulation. There needs to be regulatory clarity because the US is losing the blockchain battle right now to a lot of different countries.”