Corona crisis spurs crypto currencies

At the beginning of the Corona pandemic, crypto currencies looked like clear losers of the crisis. However, this has gradually changed since mid-March, and even the recent drop in Bitcoin’s share price back into the USD 10,000 range does not change this. The expansion of expansive monetary policy observed worldwide and the fiscal programs of historic proportions have probably made a significant contribution to the positive momentum. The mix of escalating government debt ratios and, at least in the long term, considerably increasing price pressure has apparently led investors to look for investment opportunities outside the euro, US dollar and other currencies.

Numerous crypto-currency proponents also assume sustainable, corona-induced changes in people’s behavior, which would have led to a higher general acceptance of block-chain-based currencies. The background is an assumed structural break in the form of a digitalization push, which has been triggered by increasing web conferences, home office and online shopping. By no means new or necessarily corona-induced, but always good for rising Bitcoin prices, were furthermore budding speculations about a growing involvement of institutional investors.

In view of these speculations and the share price development of the past months, many observers will probably feel reminded of the second half of 2017, when the Bitcoin share price suffered considerable losses after reaching a new historic high. Admittedly, there are – then as now – good reasons that can be used in retrospect as justification for the price increases. However, the past has also shown that these arguments are no guarantee for sustained high price levels or additional profits. Rather, the crypto currency is worth what buyers are willing to pay for it. And the past months showed once again impressively that this readiness can depend on various factors. Interested parties should act accordingly cautiously, as tempting as the dynamic rise in prices over the last few months may be.

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