A positive outlook among turbulent markets and cryptocurrency use is on the rise
On March 11, the World Health Organization (WHO) officially announced the coronavirus a pandemic. Tedros Adhanom, Director-General of WHO said in a press statement: “We are deeply concerned both by the alarming levels of spread and severity, and by the alarming levels of inaction.” He added: “We have therefore made the assessment that COVID-19 can be characterized as a pandemic.” The announcement signalled the mass sell-off of financial assets across the industry.
By the close of the first quarter, the Dow Jones Industrial Average had plunged 23 per cent and London’s FTSE 100 dropped 25 per cent — their largest quarterly falls since 1987. Indeed, the S&P 500 lost 20 per cent in the first quarter, the worst decline since 2008, signalling the impact of COVID-19 and the halt of business activities to slow the spread of the virus.
Perhaps unsurprisingly, cryptocurrency markets have not been spared. In March, prices tumbled, with BTC/USD falling from $7,945 to $4,842. The drop almost immediately followed Mr Adhanom announcing the pandemic.
Wider impact on industry, economy and events
The ramifications of COVID-19 have been felt across industry and throughout key economic markers. US crude trading fell below $20 a barrel on April 15 and Brent crude fell by 7 per cent to $27. This comes as the International Energy Agency (IEA) forecast demand for oil will fall by 9.3 million barrels per day, reducing the market to 1995 levels.
Long-term, economists forecast a decline greater than in 2008. London-based global information provider IHS Markit predicts growth to shrink by 2.8 per cent in 2020, compared to 1.7 per cent in 2009.
As early as February, global cryptocurrency and blockchain conferences moved to cancel events in among efforts to stem the spread of COVID-19. Hong Kong Blockchain Week 2020 and Token2049, as well as Japan’s TEAMS Blockchain Summit, have been rescheduled for autumn this year.
The organisers of Binance Blockchain Week Vietnam and niTROn, in South Korea, have gone a step further and offered participants full refunds after cancelling the events. Following the United States overtaking China with the most reported cases of COVID-19 in March, US conference organisers followed suit with Bitcoin 2020 in San Francisco moving to Q3 2020 and Blockchain Summit in Washington DC cancelled.
Not everyone forecasts doom and gloom
However, not all are forecasting financial doom and gloom. Michael Novogratz, Chief Executive of cryptocurrency-based investment company Galaxy Digital was interviewed on Bloomberg TV on April 13. He said: “I’m long gold, I’m long Bitcoin — we are seeing a monetization of debt like we have never seen in our lifetimes.” He added: “In the long run, that has to make hard assets look better. This is the time for Bitcoin.”
Although Bitcoin (BTC) lost 30 per cent in March, Mr Novogratz explains that the cryptocurrency has become popular and widely adopted for investment in Europe and the US. “In the last year, it has become a macro weapon and investment choice. Hedge funds and high-net-worth individuals who had never bought it before are buying it.”
Cryptocurrency companies are joining the global fight against the pandemic and donating funds for much needed medical supplies. Changpeng Zhao, Binance Chief Executive, said in an ask-me-anything (AMA) live session on April 3 that the exchange has pledged $2.4m in cryptocurrency to purchase much needed medical supplies. Mr Zhao noted that the exchange plans to donate an additional $2m through the Binance Charity Foundation. “We are donating physical supplies, masks, medical supplies and hopefully eventually ventilators,” he added, estimating total contributions to be “somewhere around $5m”.
Charities accept cryptocurrency payments to fight COVID-19
A major turn has been the increase in cryptocurrency as an accepted payment method in the bid to fight the coronavirus pandemic. Charities and non-profit organisations, in particular, are turning to BTC payments as acceptable donations.
In hard-hit Italy, the Italian Red Cross moved to accept BTC and other cryptocurrency donations from March 12. The charity’s goal is to use the proceeds to set up second-level advanced medical posts for pre-triage purposes. The fundraising campaign was so successful it reached its $10,710 target in a mere three days and the charity has since moved to raise more funds via cryptocurrency donations. The Red Cross hopes to raise $26,000 in the next round to purchase emergency equipment.
A key sanitary concern during the pandemic is hand washing. The Water Project charity is tackling the issue and bringing sanitary conditions to African countries. The charity has been working hard to install and repair water points in poor rural regions. Charity workers are also educating communities on good hygiene practices. To boost donations, The Water Project accepts BTC, Bitcoin Cash (BCH), Ethereum (ETH) and Litecoin (LTC) alongside fiat payment methods.
Charity for vulnerable young people, Save the Children has committed to providing aid to refugee communities. The charity works tirelessly to bring relief to the most vulnerable members of society. They are currently providing aid at camps including the Rohingya refugee camp in Bangladesh. Save the Children, in conjunction with cryptocurrency donation organisation The Giving Block, now accepts BTC donations and other cryptocurrencies. The charity’s move to accept cryptocurrency provides an additional source of giving to aid them in their tireless efforts to provide children with stability and a certain future.
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Accepting cryptocurrency donations opens a new avenue of funds for charities and provides a potential reduction in transaction costs. The move makes transferring funds more straightforward for charities and non-profit organisations. Low transaction fees also allocate a greater proportion of donations for charitable purposes. Finally, using cryptocurrency has the added benefit of making payments and transfers in global regions that lack financial infrastructure. Often. These regions are where aid is needed most and access to financial aid can often be cumbersome.
Even during these trying times, cryptocurrencies continue to gain widespread use. Their adoption—especially among charities and non-profit organisations—points towards a growing awareness and acceptance. The fact that cryptocurrencies are being adopted during a crisis and not pushed to the wayside like so many potential innovations currently are is a positive sign of their usefulness indeed.