Economist pointed out to the security of bitcoin during the economic crisis
An economist at the Kingston University Business School is confident that for many states, the main crypto coin may be the safest asset in the midst of an economic crisis. Dr Jinsha Zhao, a teacher at the Jinsha School, published the results of the study, in which he analyzed bitcoin.
Bitcoin can be traded in tandem with various national currencies, which contributes to the study of the impact of economic crises on the crypto coin. The scientist analyzed the relationship between the value of fiat and BTC trading volume in almost 50 countries.
Zhao claims that his analysis of the period from 2014 to 2020 helped find out if people are confident in bitcoin as a financial safety haven during periods of political and economic instability. In his work, the professor researched 48 currencies.
He analyzed the US dollar, the euro and the most vulnerable currencies of the global economy. It turned out that 8 currencies have fallen in price by more than 60% against the dollar over the past 6 years.
The scientist concluded that during the fall in the value of currencies or during periods of serious devaluation in the analyzed countries, the trade in the first crypto coin increased significantly. For example, in the situation with Venezuelan and Argentinean currencies, the growth of investments in BTC occurred against the background of their depreciation. Citizens of these countries invested in bitcoins, fearing an economic crisis.
Zhao noted that after the start of the pandemic, the volume of digital currency trading in the countries under study fell. This means that investors still consider BTC to be a risky investment compared to conservative assets. In addition, bitcoin is a tool for hedging risks arising from devaluation.
CryptoQuant analysts point out that the current volatility of the crypto market does not prevent large investors from continuing to buy BTC. The CEO of the company, Ki Yang Joo, noted that “institutional investors are buying bitcoins right now through market makers.” According to him, large crypto platforms are quite popular with corporate investors.