The pandemic of the COVID-19 virus has struck the whole world. It hasn’t left global financial markets without consequences. The cryptocurrency market reacts quickly to such global events. It often mirrors the volatility seen in traditional markets. For example, the New York Stock Exchange recorded a fall at the end of February. This happened when it became obvious that a pandemic was imminent. The impact on the world economy couldn’t be avoided.

The Dow Jones declined by approximately 600 points compared to before the virus spread accelerated. Recall that the Dow Jones index is based on shares of the 30 largest US companies trading on the stock exchange. Additionally, the World Bank changed its economic growth forecasts. All projected growth rates for 2020 were adjusted downward.

The Decline Followed by a Quick Jump

In line with trends in the financial markets, cryptocurrencies have generally declined in value. Bitcoin, the dominant cryptocurrency, also saw a significant drop against the USD. Its price fell from about $8,000 to below $5,000 in a single week in mid-March.

Interestingly, Bitcoin’s price then rose sharply from $5,000 to $6,000. This happened after the Federal Reserve lowered interest rates to 0% to 0.25% and announced a $700 billion injection into the US economy. This jump shows how closely Bitcoin is linked to the US dollar, which is widely analyzed.

Let us briefly remind you that Bitcoin can only be bought using the American national currency. If you buy Bitcoin using one of the FIAT currencies that isn’t the US dollar, you first convert it into USD, and only then you buy Bitcoin. Given that there are places to buy Bitcoin with a credit card, many people find this as a more convenient option to come into possession of this cryptocurrency.

However, the above-mentioned jump didn’t last long, as the cryptocurrency market reacts quickly to changing conditions. In the next 24 hours, Bitcoin lost almost 10% of its value. Along with Bitcoin, the value of other cryptocurrencies (such as Ethereum, Ripple, Litecoin, and others) also fell. They lost between 5% and 12% of their value in the same period.

Will Cryptocurrencies Survive in Times of Crisis?

It’s known that one of the basic motives that drive stock exchanges is the possibility of making money. In that sense, more or less risky moves are undertaken that provide a smaller or larger profit, or a loss.

At a time like this, when a new virus emerged that caused a pandemic and when people’s fear for their own lives overcame the desire to make money, investors became very worried.

Although cryptocurrencies are formally independent of FIAT currencies, their interdependence becomes apparent at times like these. In fact, it would be more correct to say that there’s an interdependence between the state of the world economy and all other currencies.

If we look at things from a different angle, FIAT currencies are regulated by the home countries that issue them, while cryptocurrencies are self-regulating mechanisms that can’t be influenced by foreign interventions.

In fact, cryptocurrencies are directly exposed to market mechanisms and reflect the real state of the economy as much as possible. It’s for these reasons that the future of cryptocurrencies is quite certain and simply can’t be bypassed.

Whether the primacy will be taken over by Bitcoin or another cryptocurrency, or they will change places in the lead, is a matter exclusively of market movements. Cryptocurrencies in these times of crisis are proving not only their technological superiority but also their market superiority.