The new outbreaks of COVID-19 are forcing governments to implement new precautionary health measures, which are beginning to affect the development of activities and weaken the economy, while the cryptocurrency market continues to boom.
The wave of economic stimuli imposed by the governments and central banks of several countries, which created several trillion dollars out of thin air during 2020, and the implementation of new precautionary measures to minimize the risks of contagion of COVID-19, are causing a new weakening in fiat currencies, mainly in the euro, which decreased by 3,5 cents against the US dollar.
Market contraction
Less than 1 month ago, the euro had reached a 2-year high against the dollar, worth 1,235 EUR/USD. However, the currency entered a bearish trend, and is devaluing against the US dollar, the main reserve currency of value globally. At the time of this publication, the value of the euro against the dollar has fallen by 2,8%, reaching a current value of 1,20 EUR/USD. The weakening of this currency in the markets, in the opinion of several analysts and experts, may be related to the strict closures that governments in Europe are imposing, as new measures to minimize the risks of contagion and spread of the virus, despite the fact that in In some regions, businesses may be ignoring these measures and restrictions. This situation is causing a loss of value in the fiat currency, since the markets expect the euro to contract, and therefore, there will be less demand for it.
Source: Truste Node
The current situation of the euro contrasts greatly with the current behavior of cryptocurrencies in the markets, such as Bitcoin (BTC), which are gaining greater strength and momentum within these spaces. Several analysts believe that interest in Bitcoin and other cryptocurrencies is growing as they see this asset class as a potential store of value; Therefore, they may be turning to crypto assets to protect themselves from the loss of value that the euro and other fiat currencies are suffering.
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Increased interest in Bitcoin and cryptocurrencies
On twitter, Willy Woo, expert analyst of Bitcoin and cryptocurrencies, , points out that despite the rise in value of Bitcoin in recent months and days, the number of cryptocurrency users continues to grow, instead of decreasing due to the rise in value. Bitcoin is listed on the markets at $37.400 USD at the time of this edition, which represents an increase in value of almost 20% in the last 30 days.
In the case of Ethereum (ETH), interest in this cryptocurrency is raising its price to new all-time highs. ETH trades at more than $1.641 USD at the time of writing this article, showing growth of more than 80% in the last month.
Direct opposition to Bitcoin
The contrast in value that cryptocurrencies are generating in the market, especially Bitcoin, is once again leading detractors of cryptocurrencies to speak out against their growth and revaluation in the markets. For example, Christine Lagarde, president of the European Central Bank (ECB), recently stated that Bitcoin is a highly speculative asset that must be regulated to prevent its use in illicit activities.
Authorities and banking entities insist that cryptocurrencies are a vehicle that facilitates money laundering and tax fraud, although blockchain forensic analysis companies, such as Chainalysis, demonstrate with data and information, quite the opposite. On the other hand, while the ECB raises doubts about the functioning and transparency of Bitcoin, the entity is working on the development of a central bank digital currency (CBDC), known as the digital euro, which at the moment does not have a defined release date and important information about it is still unknown.
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