Ever since its emergence in 2009, cryptocurrencies have been growing at a steady pace. With the world continuously turning digital, it should come as no surprise why the original Bitcoin, along with other digital coins, revolutionized the finance industry.
But considering the global recession caused by COVID-19, you may be wondering what the future holds for digital currencies.
Despite the health crisis, it’s good to know that the crypto industry remains lucrative. Over the past few months, traditional investments such as stocks have taken an enormous hit, forcing investors to diversify their portfolios.
Given that the pandemic has called both businesses and consumers to engage in cashless transactions, the current environment has given crypto the opportunity to shine.
What’s Next for Digital Currencies for 2021 and Beyond?
To fully grasp what digital currencies can bring to the table, let’s start by examining the economic impact of COVID-19. Due to the health risks that the virus poses, governments and health agencies were forced to take precautionary measures.
To keep the general public safe, some countries have called for enhanced community quarantine, shut down commercial establishments, and limited transportation in certain areas.
These acts may have stopped the spread of the virus, but they got in the way of business activity. While some companies have been able to navigate the operational issues and changing customer demands during this time, those who have failed to adjust had no choice but to shut down. With several companies closing down for good, this crisis has plunged the world into economic uncertainty.
To combat inflation and the like, individuals and corporations alike have turned towards digital currencies. Similar to the 2017 price run, the high demand for coins and increased trading volume have inevitably caused a surge in prices. Despite hitting yearly lows of below $5000, Bitcoin’s value is now back to a lucrative price of $16,658.
Considering the world’s economic climate and the current trends that surround the industry, experts estimate that crypto will reach new heights in 2021 and beyond. Now that the crypto market has surpassed the $200-billion threshold, you can expect more ambitious investors to start entering this sphere.
But even though cryptocurrencies were virtually unaffected by the pandemic since it can be traded using mobile phones, one shouldn’t make the mistake of viewing it as a safe heaven.
The market’s volatility may be a welcome sign to investors playing the long game, but there’s still no exact way of predicting when a crash or boom will happen. At the same time, there are several challenges that crypto needs to overcome since it’s currently seen as an asset rather than a currency.
With new technologies emerging and more businesses going digital, it’s safe to say that we’ll know the answers soon.
Final Takeaways
COVID-19 has forced the globe to re-examine its financial and economic systems. The challenges have led to financial struggle, but they’ve also caused an increase in business activity across all sectors. While nothing is set in stone, crypto enthusiasts have many things to look forward to.
It may take some time before crypto is adopted mainstream, but the changing financial infrastructure should serve as a positive sign.
Whether you should invest or not in a currency like Bitcoin will ultimately depend on your preferences as an investor. The industry currently has a positive outlook, but just like any other investment, entering a venture doesn’t guarantee any form of returns.
Until then, people will just have to wait and see what the future has in store. If you’re planning to invest in a digital coin, taking some time to reflect on your current financial standing, risk appetite, and more will allow you to create a comprehensive investment strategy.