It has been quite a remarkable few months for the world economy, as well as for bitcoin. The coronavirus has rocked economies throughout each continent in previously unforeseeable ways, and the extent of the fallout has yet to be seen as many countries remain under lockdown while some hesitantly flirt with reopening. Bitcoin inevitably has been affected by the coronavirus as well. On the one hand, even the most stable currencies throughout the world have fluctuated recently, especially as influential commodities such as oil have fallen drastically in value. Even the most reliable traditional assets like gold have not looked promising in recent months. While bitcoin has proven more stable amid the coronavirus crisis than many national currencies, assets, and commodities, the conditions for innumerable bitcoin investors, dabblers, and miners have changed. For those who depended on other forms of income to get by, those sources may have dried up amid lockdowns, necessitating the selloff of bitcoins to be used for substance such as food and rent payments. Still others may have cut down on bitcoin mining due to its prohibitive expense.
To add to the unforeseen coronavirus crisis, bitcoin has seen the Halving, cryptocurrency’s most anticipated event of 2020, on Wednesday May 13th. Anticipated with excitement by investors, they have hung their hopes upon the increased value of each coin, assuming the demand for coins would stay the same while the rate of supply would be cut in half. However, for bitcoin miners, the Halving was essentially a paycheck cut in half, at a time when many have already lost their local currency paychecks due to the coronavirus crisis. The reward for mining coins has also been reduced by half, undercutting the motivation of many to mine.
In this time, some, such as the CEO and co-founder of the bitcoin investment app Amber, Aleks Svetski, believe that the world pandemic and economic crisis have raised awareness of bitcoin. The economic turbulence caused by virus fears and lockdowns have lead governments toward bailouts and counterbalancing tactics such as money printing. Some believe that bitcoin’s original monetary policy was spurred by the runaway bailouts and money printing of the 2008 financial crisis. The current crisis is often likened to and expected to outlast that economic event. Svetski opined that such efforts are not healthy, creating a false sense security while unemployment continues to rise. Notably, before the coronavirus crisis and this new set of money printings and bailouts, since 2000, the quantity of US dollars in circulation has roughly tripled.