President of the Russian-Asian Union of Industrialists and entrepreneurs (RASP) Vitaly Mankevich noted that the March drop in bitcoin is due to sales of the Chinese middle class, which partially stored its “safety cushion” in the cryptocurrency, and the fall in income forced the sale of part of the savings to Finance current expenses.
“Probably, in the case of the second wave of Covid-19, we will first see a similar movement with a subsequent return to normal values. At the same time, the current measures taken by monetary authorities around the world create a positive groundwork for the cryptocurrency. The fact is that endless economic incentives in the form of quantitative easing and negative rates will eventually lead to a surge in inflation, which will reduce interest in Fiat currencies and force people to look for more reliable means of saving, which include real estate, stocks, art and cryptocurrencies,” Mankiewicz predicted.
According to him, the growth of demand for cryptocurrencies will depend on the decisions of the fed, ECB and People’s Bank of China. If the government’s incentives do not restart the economy, they will have to increase their volume, which will also increase inflation and lead to increased interest in a new type of asset.
At the moment, no one can say exactly how bitcoin and altcoins will react to the new global economic turmoil. However, now digital money can not be called a protective asset, so it is premature to use it to save capital. Cryptocurrencies have high volatility, which is why they are more suitable for speculation.