Bitcoin news: Price hit by dramatic value fluctuations amid coronavirus panic buying and selling
'This is the first time the world has faced an economic crisis when there has been an alternative financial system,' one analyst says
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Your support makes all the difference.Bitcoin has experienced wild price swings in recent days as cryptocurrency markets respond to the global economic uncertainty sparked by the coronavirus epidemic.
The cryptocurrency has swung between highs of $9,000 and lows of 4,000 since the start of March, representing the most severe price volatility since the market explosion and subsequent crash in late 2017.
Over the last week the value of one bitcoin has risen by more than $1,000 to its current price of $6,600.
The latest price rise came after the US Federal Reserve announced unlimited quantitative easing measures to help reduce the economic impact of coronavirus.
This follows similar announcements from other central banks like the Reserve Bank of Australia and the European Central Bank to artificially increase the money supply.
Such drastic economic policy is seen by some analysts as a potential opportunity for investors, who may consider bitcoin as a safe-haven asset due to its decentralised nature.
The limited supply of bitcoin – only 21 million will ever exist – means it is also immune to quantitative easing and other emergency monetary measures that fiat currencies are susceptible to.
“The US Federal Reserve’s announcement effectively pumps billions of dollars into the market, so some investors may be weary that the dollar will lose its value, and are moving back into bitcoin to hedge against inflation,” Simon Peters, a cryptocurrency analyst at the online trading platform eToro, told The Independent.
“Because the amount of new bitcoin that comes on to the market decreases over time, it is by design a deflationary asset when compared with a fiat currency like the US dollar. In theory the value per bitcoin should increase over time.”
Other major cryptocurrencies continue to experience similar fluctuations, though the full extent of the impact the coronavirus outbreak has had on markets is yet to be fully realised.
Bitcoin was launched in 2009 in response to the financial crisis of the previous year, offering a revolutionary alternative to the traditional financial system.
The electronic cash system has failed to achieve mainstream adoption in the subsequent years, during which the global economy recovered and achieved sustained growth. Some experts believe that the advent of another economic collapse could be see a renewed interest in bitcoin as an alternative form of currency and store of value.
“This is the first time the world has faced a financial crisis when there has been an alternative financial system,” said Marcus Swanepoel, CEO of London-based cryptocurrency exchange Luno.
“Cryptocurrencies are still very young, and at this stage in their development cannot replace fiat currencies, but as the problems global markets face increase we will see investors looking at digital assets as a way of distancing themselves from digital investments.”
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