Amidst the chaos on the markets, stablecoins seems to have been least affected by the market crash. Analysts predict that over $7 Billion in investment funds will flow into the cryptocurrency market in the coming months.
Traders of all commodities including Bitcoin, gold and stocks have experienced a rough time in the last few weeks amidst the economic effects of the coronavirus pandemic. However, not all markets are suffering from the wave of volatility caused by COVID-19. The stablecoin market specifically has been flourishing during this period and continues to do so, as BeInCrypto outlet informs.
Commodity prices are being reflected in the cryptocurrency markets. High price volatility and the high amount of capital investments in stablecoins indicate signs of investors’ hesitation.
The sudden increase in the market value of stable coins indicates that investors involved with other cryptocurrencies such as Bitcoin and Ethereum banked their money in stable coins following the cryptocurrency market crash. However this is just a short-term behaviour, traders will gradually reinvest back into cryptocurrency as the market shock dispenses.
Besides, soon enough the cryptocurrency market might see a flow of new investors from traditional sectors. The new coronavirus relief bill adopted by the US government could possibly cause a significant devaluation of the dollar, according to John McAfee.
As coinidol.com, a world blockchain news outlet has reported, this might cause traditional investors switching to alternative markets due to traditional assets volatility. During the current economic recession, it seems only natural that traditional asses have a lack of trust because of their increased volatility. On the other hand, there is a strong global trend of going digital amidst the COVID-19 pandemic.
There are also rumours of the reduction of fiat money circulation as people are trying to minimize physical contacts by every means. In such a situation, cryptocurrency might be a good alternative. Besides, with the inflow of investors, the market might become less volatile, which can make it even better.