From around $7,000 on January 1, 2020 to around $17,000 on November 27, 2020, bitcoin has surged during the Covid-19 pandemic.
From around $7,000 on January 1, 2020 to around $17,000 on November 27, 2020, bitcoin has surged during the Covid-19 pandemic. In the last two month, bitcoin has seen a steep rise – from $10,665 on September 25, 2020 to $19,028 on November 25, 2020 before falling to around $17,000 level.
But what makes people take the refuge in cryptocurrency during the pandemic?
“In the pandemic, many Indians have lost jobs, and this has led them to invest in cryptocurrency to earn side income. Moreover, a lot of new professions have emerged in this space – people are becoming traders, technical analysts, or crypto influencers. Many help their friends and family to invest in crypto because not everyone understands crypto. There are various crypto use cases that have emerged in India, and have affected Indians in a positive way,” said Nischal Shetty, CEO, WazirX.
“Increasing price of Bitcoin also creates a positive sentiment, and has pushed retail investors to jump in,” he added.
The latest surge pushed bitcoins close to the highest level of $19,783 that it achieved in late 2017.
But in case the rupee also depreciates, will the price of bitcoin see the shoot up from 2017?
“During the pandemic, a lot of money printing has happened globally leading to inflation. The stock markets have also been very shaky. People know that stock market conditions depend on companies which have, again, been affected by the pandemic. So people move their money to ensure that its value is more or less conserved in a deflationary asset like gold in the traditional system, or Bitcoin in the digital system. Bitcoin has a limited supply, and is seen as a store of value,” said Shetty.
Providing his opinion on whether investors should encash or hold their investments in cryptocurrencies in India at this high level, Shetty said, “What I’m seeing is, people are now taking notice of crypto. A lot of people who had bought crypto in 2017 at high rates, and held it it throughout, are getting activated, and everyone about what they should do – hold it or sell it. There’s confusion in the market, and we’ll know more when it stabilises a bit. In case of bitcoin, 60-70 per cent of investors hold it as a long-term investment, a small percentage of them holds it for medium term, and a very small percentage holds it for short term.”