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The Post-COVID Financial Market: Is There Still A Life On The Cryptocurrency Market?

The spread of the pandemic was a powerful and unexpected blow to the whole world. The financial market immediately felt the negative consequences of the spread of panic and disappointing economic forecasts. Under the influence of widespread concern, investors were forced to redistribute assets in their investment portfolio and abandon assets with a high level of risk.

Today, we can observe how the global economy begins to take the first steps for recovery. The chief economic adviser sees this as a positive trend: he believes that favorable conditions are now being created so that investors again turn their attention to a class of assets with a high level of risk, including cryptocurrencies.

Economic adviser optimistic about resuming “risk game” 

Kovid-19 provoked an increase in panic among investors, and as a result, launched a chain of mass asset sales. This was a powerful blow to the stock market: the collapse of stocks shook not only the confidence of many investors but also caused enormous losses. “Black Thursday” March 12 has gone down in history as the day of a massive collapse in the financial market.

Negative consequences did not pass by the oil market. As a result of economic restrictions, the price of “black gold” fell to the bottom and showed one of the largest anti-records. Despite propaganda decentralization, the cryptocurrency market has also shaken, and as a result, the price of leading crypto assets such as Bitcoin and Ethereum has fallen sharply.

Today, the global economy has confidently set a course for recovery. Mohamed El-Erian, Allianz’s chief economic adviser, is positive about renewing investor interest in risky assets. If earlier, about 2 months ago, he called on investors to “fasten their seat belts”, now the tone of his forecasts has changed towards a “promising game with risk”.

What are the consequences of a return to risk?

If investors actively return to the “risk field”, this will lead to an increase in the value of shares, as well as a positive impact on the market condition of the cryptocurrency. Today, crypto assets are increasingly viewed by investors as one way of protecting against inflation. The stimulus package and the printing of money by the Fed can play in favor of crypto assets and stimulate their popularization among large financial market players.

Also, according to Coinbase, the volume of cryptocurrency purchases increased after citizens received “helicopter money”. Thus, today there are favorable conditions that fuel interest in assets with a high level of risk and possible great prospects.