2020 was a very difficult year for many, but it was also the year when cryptocurrency went viral. Due to global confinement, many turned to day trading to cope with boredom and make extra income on the side. Trading apps such as Robinhood saw a record trading volume and new accounts signing up, and Bitcoin trading consideringly increased throughout the lockdowns.
There has been a dramatic influx of investments in cryptocurrency since the onset of the COVID-19 pandemic. At the end of 2019, the total cryptocurrency market cap was hovering just under $200 billion. Fast forward to September 2021, and it surpassed $2 trillion.
Lockdowns Drove Interest in Crypto
Severe restrictions caused by the virus sparked the interest in digital assets for many young people that were stuck at home. A 22-year-old student from India who wants to keep their identity hidden stated that if it wasn’t for the pandemic, they wouldn’t have had the opportunity to learn more about crypto.
“In March 2020, due to the lockdown I had a lot of free time. A lot of news started covering crypto during this time, as many countries started to acknowledge crypto. So, I started researching about them and came to know about hardware wallets, where you could have total control over your funds, and the odds of losing your coins were low. I had the fortune to be able to invest in crypto and still be financially stable during the pandemic, so I was not scared about losing my savings money that much. I started buying crypto and moved them to my hardware wallet. In just 3 months my portfolio doubled. I was very excited and bought more crypto. This is how I started investing into crypto out of my own pocket,”
the student shared with DailyCoin via Reddit.
Cryptocurrency consultancy company CryptoConsultz, founded in 2017, has also seen a rise in clients in the past year:
“While the demand for CryptoConsultz services is often dependent on market trends, we have certainly seen exponential growth in the volume of individual consultations we conduct. We're also seeing a variety in the types of consultation services we provide as compared to years past, with crypto security being a hot topic,”
the company’s founder, Nicole DeCicco, told DailyCoin in an email interview.
One could argue that, regardless of the pandemic, the cryptocurrency industry was poised and ready to hit a tipping point in investor sentiments toward digital assets. A more plausible explanation is that we’re seeing a rare combination of circumstances dramatically impacting the markets and driving the growth of the industry through an inpouring of both retail and institutional investments, DeCicco shared.
People Turn to Crypto in Uncertain Times
According to DeCicco, it’s not the first time in modern history we’ve faced financial uncertainty, but unlike economic downturns of the past, we’re seeing an across-the-board unpredictability when dealing with a crisis of this magnitude.
Hyperinflation fears have forced even those with the most traditional investment strategies to consider alternative investments. While these same investors might have balked at cryptocurrencies two years ago, they are being forced to reevaluate their holdings and their stance on digital currency.
Economic impact payments, or stimulus checks, are a more obvious factor potentially driving an increased interest in cryptocurrency during the pandemic. Many Americans looking to use the payments for investment purposes also found themselves with more time on their hands and perhaps had the bandwidth to thoroughly research cryptocurrency investments, engage with peers on the topic through social media platforms and explore cryptocurrency exchange platforms. This, coupled with a trend towards platforms that are easier to navigate for the everyday user, has increased access to such investments and moved the industry away from an elite tech-savvy minority towards an all-encompassing ecosystem that’s much more welcoming to the majority.
Cryptocurrency Provided Benefits During the Pandemic
“Investing in crypto turned out to be the best decision I’ve made in my life both financially and personality-wise. I used to be an impulsive kid who would burn my money on silly things for instant gratification. But now, I think 2-3 times before even I spend my money,”
the 22-year old crypto-enthusiast said.
According to CryptoConsultz CEO, crypto has indeed provided a multitude of benefits for participants at an individual level. We’re hearing more stories of middle-class investors who have accrued life-changing amounts of wealth over the past year. Rather than “get rich quick” schemes, investors are starting to see the true value behind the tech and how blockchain will innovate and disrupt many traditional models that have become stagnant.
The excitement surrounding cryptocurrency has led many of our clients to reevaluate their investment strategies and brought more focus to their overall financial health, which regardless of one’s acceptance of digital currency, has obvious benefits.
“Crypto has also opened the narrative around decentralized finance and governance models. As a society, we've realized how financially vulnerable we are. For some, this has created a sense of distrust. Consumers and investors are looking to decentralized models as an answer that might provide more stability and predictability, even during times of crisis,”
On The Flipside
- Even though the pandemic was one of the causes of sudden crypto popularity, there are many other reasons why cryptocurrency became widely accepted.
- Lack of knowledge about investing in crypto also resulted in people losing money during the pandemic.
Why You Should Care?
Due to the pandemic, people had more free time to research the subjects that they care about and spend more time on their interests. Financial difficulties and mistrust in governments were other reasons that steadily drove crypto interest in 2020.