Coronavirus Attacks Bitcoin

Coronavirus Attacks Bitcoin

In politics, we have polling legends. They are legends because they have figured out mechanisms to understand the voters.Because elections actually do have hard outcomes (yes, who wins), electoral polling is not an easy job. More than 90% of U.S. pollsters, experts in their domains, failed to predict the Presidency of Donald Trump. In practically anything else but election, they would remain correct because there would not have been a way to know the real mindsets of the voters or customers! So, those reports on consumer preferences, consumer trends, etc are all yo-yo because there is no way to know, absolutely! They could be right. But they could be wrong. And there is no clear way to make that call.

That takes me to cryptocurrency. As coronavirus shakes empires and territories, I have expected Bitcoin to rise up to its “promises”. Unfortunately, Bitcoin at the moment is under serious virus attack. Yes, the value of Bitcoin is falling just as stock markets are crashing.

The promise was this: Bitcoin and cryptocurrencies would be uncorrelated to main asset classes like stocks. So, in the days when stocks are falling, Bitcoin would be expected to hold firm, and that means NOT fail in value. As I write, Bitcoin has been falling just as stocks and with the partial disconnection of the U.S. from Europe (minus UK), announced by Trump last night, I expect Bitcoin to be under higher gravity.

The summary is this: people were unfair to Bitcoin by overselling this technology. As a means of exchange, Bitcoin and other cryptos have real values, but as a means to store value, I doubt. Under coronavirus, markets have validated that Bitcoin cannot store your value because Bitcoin is a source of liquidity and cannot be uncorrelated to main markets during crises. If your margin position in a stock is off, you can sell Bitcoin to cover the position and be at parity. Simply, Bitcoin becomes a liquid asset. Provided Bitcoin has that liquidity, its trajectory cannot be uncorrelated with main markets.

All Together

If we just decide to focus on the mission Bitcoin was originally created, as a means of exchange, not as an investment asset, the technology has a great promise. That is why I am all in for a stablecoin for Nigerian naira under the full control of Nigerians, pegged to the real naira, running a native blockchain with APIs to boost the sector by giving access to companies and startups to do trade and commerce in a transparent ecosystem. 

Bitcoin chart

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