With vast swaths of the world markets in virtual lockdown amid the coronavirus pandemic, some predict that the shocks rippling through the global economy in early 2020 may yet come to dwarf the magnitude of the 2008 financial crash.
Just as Bitcoin (BTC)’s creation is bound up with 2008 and the Great Recession, Galaxy Digital founder Mike Novogratz sees this year as make-or-break for the cryptocurrency.
In a tweet posted on March 22 — just hours after the United States Congress failed to reach a bipartisan agreement on a proposed $2 trillion economic support package — Novogratz wrote:
“$BTC will continue to be volatile over the next few months but the macro backdrop is WHY it was created. This will be and needs to be BTC’s year.”
Never let a good crisis go to waste
Earlier this month, traditional markets had suffered their worst blows since 1987 — a plummet mirrored in Bitcoin’s 60% drop to lows of around $3,600 on some exchanges.
As the pandemic enters its fifth week — exacerbated by collapsing demand and a price-war in the oil sector — spooked investors have continued their sell-offs overnight.
Asian stocks have slumped in the fallout from the stalemate in Congress, with Wall Street futures crashing to hit their downside limit of 5%.
Ten days ago — with investors deserting even “safe-haven” commodities such as gold — Novogratz argued that Bitcoin was no less vulnerable to the impact of the frantic liquidations:
“[Bitcoin] was always a confidence game. All crypto is. And it appears global confidence in just about anything has evaporated.”
Yet his latest tweet now points to the potential opportunities for the cryptocurrency amid the economic crisis.
In this view, Bitcoin — as a censorship-resistant medium of exchange and non-inflationary unit of account — was designed precisely as an alternative to the faltering world monetary system.
In a tweet that followed his remarks on Bitcoin yesterday, Novogratz had appealed to a stalling Congress not to repeat the “first failure of TARP” — the controversial bailout fund passed in 2008, which some consider to have left the structural weaknesses of the system virtually intact.
Taking note of Bitcoin’s apparent decoupling from COVID-stricken traditional markets earlier this week, Changpeng Zhao — the CEO of crypto exchange Binance — had similarly argued that the pandemic should be understood as a trigger, rather than the root cause, of a visibly fragile world economic order.