The Coronavirus and A Deflationary Crisis

[Subbir]

I accept as true with you that regardless of the state of the planet Bitcoin won't drop it'll haven't any impact on Bitcoin but it'll continue at its slowest pace many of us initially sold their bitcoin due to this crisis but now most are holding on. Even big traders aren't selling they assert bitcoin prices are likely to rise by the top of the year if the crisis is overcome.

[fiulpro]

Actually there were people who did imagine the Corona virus crisis , when the SARS - 2 was discovered a group of scientists wanted a loan to be approved so that they can create a vaccine against the Corona Viruses in advance for future but unfortunately their funding never came , it was deemed unnecessary.
So all of this could have been avoided is countries could focus on healthcare instead of their ministers or even building a wall .
Bitcoins is ofcourse connected to the economy but at the same time it is stabilized due to the fact that it is not one country who is investing in it , so it is like people supporting people together.
Also I think it is good that whales have not decided to act in a situation like this because it would create a lot of problems for other small investors.
Unfortunately people have to sell Bitcoins and the price will drop eventually if the quarantine is to be extended.
We actually have 2 choices , either people will die of the Corona virus or because of no economy stability , no job , no nothing because of extended quarantine.

[fabiorem]

On volatility, I've seen hypotheses on how it will go down as Bitcoin matures.

- More hodlers, less volatility. This is not true. Speculators still drive its price. Bitcoin can still drop 50% in a day when speculators dump.
- More traditional market adoption, less volatility. Assume many funds hold 1% in bitcoins, does it reduce volatility? I think it would drive up Bitcoin's price. But it won't reduce volatility. Speculators still drive its price.
- More payment adoption, less volatility. We won't get here. Low volatility is required for payment adoption. People don't want to accept a currency whose value can drop significantly within a few days.

Bitcoin has reached a significant market cap. The industry has hundreds of billions of dollars now. Volatility is still here. Will it ever go away or is it inherently a property of Bitcoin? I think volatility is a property of Bitcoin due to the 21m cap.

Good points. Its a systemic issue, due to the ponzi scheme nature of how bitcoin was introduced to the public.
Those who joined in the first 2-4 years drive the price for all the others who came later. That's why you have cliques like the WO thread, where its members are always laughing, even when the price have fallen 60% in a matter of days. The crashes wont affect them.

There seems to be no way to solve this, as any new coin introduced leads to a ponzi scheme, the first holders defining the price for the ones who came after them. Thus these coins become speculative assets, and fail the initial purpose which was to be used for payments.

Fiat also have this nature, people just dont see it. The institution which prints fiat money, the central bank, define its value for those who buy it. The difference is that the institution is impersonal, so people are less aware of the manipulation, but it is still there.

[Ryker1]

Well for me, Bitcoin is a digital currency has its own value. It can be stored or spend it the way the owner wanted. In times of crisis like this pandemic where there is global economic recession a big impact on monetary value is obvious and that is deflation. Since Bitcoin has its own value in currency therefore Bitcoin value is still affected by deflation. However, after this recession, --once the economy recovered then Bitcoin value will go up again.

[Cnut237]

I agree that it would come for bitcoin to be a safe haven but I doubt your term using absolute as safe haven. If we are going to argue which safe haven could be the absolute safe haven then it would be gold, no statement needed further.

There are several reasons why bitcoin is (potentially) better than gold as a safe haven asset. This has been discussed many times, but as one example, bitcoin has a fixed maximum supply, gold doesn't. You can't say once all the gold in the world is mined then that is the maximum, as we will probably be mining asteroids for precious metals before too long.

[figmentofmyass]

I agree that it would come for bitcoin to be a safe haven but I doubt your term using absolute as safe haven. If we are going to argue which safe haven could be the absolute safe haven then it would be gold, no statement needed further.

There are several reasons why bitcoin is (potentially) better than gold as a safe haven asset. This has been discussed many times, but as one example, bitcoin has a fixed maximum supply, gold doesn't. You can't say once all the gold in the world is mined then that is the maximum, as we will probably be mining asteroids for precious metals before too long.

it's debatable whether a fixed supply is superior to predictably low and market-controlled inflation---what gold has. fixed supply may end up making bitcoins appreciate more than gold, but that doesn't necessarily mean it's superior as the money underlying an economy.

i've been hearing about the specter of asteroid mining my whole life. i'll believe that when i see it.

[Wenbing]

Some Coronavirus lessons costed us too much. Bitcoin believers have been saying that this crypto has a big potential to become a medium of exchange, in fact, we experienced panic selling phenomena. It's so sad

During financial crisis there usually 'bloods on the streets' which means that people will loose their investment due to panic.

Well, deflationary and inflationary tendencies are what create profit in the market. So, its good to hold on to what you've until the coronavirus pandemic is over.

[webtricks]

The idea of inflationary cryptocurrency is completely stupid. If you really wanna promote cryptocurrency as a medium of exchange then stable coins are best (aren't they?). Why would someone accept payment in the currency whose value is sure to fall over time due to continuously increasing supply. Me as a vendor would never like to deal in such currency.

Secondly, the fall in Bitcoin's value doesn't fully-proof that all the investors discarded the idea of 'Bitcoin as a hedge against economic crisis'. In my views, only weak hands left market because since the day Bitcoin fell to $3800, its price is rising continuously. But what's more important is the volume. The average weekly Market Volume has risen by approximately 15% since the mighty fall which clearly shows more money is flowing into Bitcoin these days.

Finally, don't post such promotional articles in the shadow of quality discussion. If you really wanna promote a coin, simply post in the relevant section rather than posting propagandize articles. 

[Cnut237]

i've been hearing about the specter of asteroid mining my whole life. i'll believe that when i see it.

I'll concede the point, it likely is many years away. Similar to commercial fusion reactors in that sense.

But I do think we'll see it once the economics make it worthwhile. Things are moving in that direction. Easily mineable precious metals here are diminishing, and this will drive up cost of extraction. At the same time we are now seeing commercial involvement in the space industry, with some quite rapid development. The potential rewards from asteroids are - sorry - astronomical. Once the cost of getting at them and returning to Earth ceases to be prohibitive, then asteroid mining becomes inevitable. But yes, likely some way away yet.

[arthurbarajas]

a lot has happened on March 12, 2020, which caused the value of bitcoin to fall quite deep, I think the general reason for the decline in the value of bitcoin due to the current crisis due to Covid-19 is in a state of emergency, they are forced to sell to meet urgent economic needs,

[shoreno]

Some Coronavirus lessons costed us too much. Bitcoin believers have been saying that this crypto has a big potential to become a medium of exchange, in fact, we experienced panic selling phenomena. It's so sad

During financial crisis there usually 'bloods on the streets' which means that people will loose their investment due to panic.

Well, deflationary and inflationary tendencies are what create profit in the market. So, its good to hold on to what you've until the coronavirus pandemic is over.

only if you still have a sufficient stocks . a stock of food and some cash to sustain you for a longer time or until the corona pandemic is over but this isnt the situation that happens to the most of us which leads to sometimes pull out our assets and exchange it for cash.   deflation and inflation creates a profit ? well that could be right if only there is no major issue like corona because people can be calm and think properly .

[plast555]

First of all, I don't believe in the deflationary crisis as every one is discussing in the mainstream I hope everyone would have seen the funny cartoon video made on this topic what is deflating in the real terms for the retail users? nothing in fact the real users are facing inflation with the increased prices of food items and because of the demand and supply so this is just the government numbers finally the people will be paying more than what they afford previous year for the same commodity or services

[exstasie]

First of all, I don't believe in the deflationary crisis as every one is discussing in the mainstream I hope everyone would have seen the funny cartoon video made on this topic what is deflating in the real terms for the retail users? nothing in fact the real users are facing inflation with the increased prices of food items

That is probably just the effects of short term supply chain disruptions, which are causing localized retail shortages and price hikes. That doesn't really mean general inflation. I haven't noticed higher prices where I live but some items (like paper products and disinfectants) have been harder to find.

After watching the carnage in crude oil, I pulled up monthly charts for US-produced commodities like corn, soybeans, sugar, copper, and cotton. They are looking scary, on the edge of breaking below decades-long support levels. A collapse of these commodity markets would further confirm the US economy is entering a depression.

That's one route to lower CPI but it will destroy all hopes of a V-shaped recovery. Goodbye 1987, hello 1929.

[RealMalatesta]

When the whole world is in a crisis, it looks like nobody is in crisis, that is what we are living in right now. When there is a problem in UK that only affects UK prices, when there is one in France it affects France, when there is one all over the world at the same time no matter how much you print or not matter how much you give loans, zero interest whatever you do, it will not affect your nation that horribly because comparatively other nations are doing the same thing as well.

When one nation does bad and the other one does even worse, its not as bad as you might think, its horrible when one nation is doing alright while the other one crashes, that is where you see the difference because you have hard time purchasing from other nations when you are the only one doing bad.

[LeGaulois]

...

It has nothing to do with Covid-19. It has been caused by Bitmex and the btc futures and its liquidation engine, They were even forced to put the site on maintenance to let the market breathe. I don't know why it hasn't been talked in the forum but the price could have gone down even more.

They justified the maintenance claiming it was to stop a DDOS but it's a big lie.

[FanatMonet]

7% per year? Really? This cryptocurrency in 10 years can become garbage, because after 10 years, the amount of this cryptocurrency will increase by 96% of the original one, and I personally don’t see the point of investing in such a cryptocurrency, because. money will constantly depreciate.

[squatz1]

Not sure if anyone else has said this, but I'd just like to say something: You know that when you provide a source on here it's not typically because you've just copy and pasted exactly what the article is. It's TYPICALLY used when you take a few ideas or you summarize the ideas of someone else.

Good article though, even if the source is someone who is just trying to ADVERTISE THEIR OWN COIN. Important thing to point out. Don't know if you noticed that.

I was actually saying the same sort of thing in P&S by the way. I was talking about how no one is spending money right now and b/c of that when the fed / congress goes through all of the monetary policy stuff that they're planning the inflation rate is going to stay within 2-3 percent as it typically does. We don't have a lot of data on this, but for the last stimulus package -- 2009 (Obamas stimulus package) -- inflation was in that same range even with the Fed doing what they're doing now.

[abhiseshakana]

First of all, I don't believe in the deflationary crisis as every one is discussing in the mainstream I hope everyone would have seen the funny cartoon video made on this topic what is deflating in the real terms for the retail users? nothing in fact the real users are facing inflation with the increased prices of food items

That is probably just the effects of short term supply chain disruptions, which are causing localized retail shortages and price hikes. That doesn't really mean general inflation. I haven't noticed higher prices where I live but some items (like paper products and disinfectants) have been harder to find.

After watching the carnage in crude oil, I pulled up monthly charts for US-produced commodities like corn, soybeans, sugar, copper, and cotton. They are looking scary, on the edge of breaking below decades-long support levels. A collapse of these commodity markets would further confirm the US economy is entering a depression.

That's one route to lower CPI but it will destroy all hopes of a V-shaped recovery. Goodbye 1987, hello 1929.

Indeed, there have now been many signs of the occurrence of the great depression in many countries, such as a decrease in consumer spending. Massive share sales, a decline in production to predict banks will experience systemic failure. All that remains is for the country's leaders to address this problem and choose a solution. For Americans who have faced great depression, they already have the formula even with a great depression they can become a superpower country now.

Corona is a test of the independence of a country. What does it mean to be independent if it cannot be sovereign and often tossed around with global situations. Want to follow what America has suggested through the IMF or copy what America has done to turn disaster into a miracle with an economist at war.

We must start thinking about what makes the world economy not resistant to depression, this is proof that the current economic understanding is non-sense whose practice does not solve the problems of the existing world economy that is rich getting richer and the poor not coming out of the poverty zone. Is the formula distributed by the IMF effective?

Therefore we should copy the example of what big countries do, not do what they say.

All macroeconomic problems start with the practice of banks that issue debt securities and take interest which causes speculative actions and the economy does not develop in the real sector.

[Naida_BR]

The whole idea of Bitcoin and cryptocurrencies is that they have totally different characteristics from fiat currencies.
As Bitcoin is resistant to inflation this means that people are not going to lose the value of their money at all.
What would be the case of creating an inflationary cryptocurrency? It won't provide any positive impact to the market - at least at the current period of time.

[dnprock]

The whole idea of Bitcoin and cryptocurrencies is that they have totally different characteristics from fiat currencies.
As Bitcoin is resistant to inflation this means that people are not going to lose the value of their money at all.
What would be the case of creating an inflationary cryptocurrency? It won't provide any positive impact to the market - at least at the current period of time.

You can dislike market manipulation and corruption. But you cannot worship deflation and say it's a cure for the disease. People will see how deflation wreaking havoc to economies. Inflation has its own role. Why not use a crypto with fixed inflation? It offers the same liberation as Bitcoin, just different economics and use case. The game is fair.