The role of crypto-currencies during this crisis has become the subject of debate. It is a fact that the dollar has been hit. Some experts believe that digital money can function as an active refuge. A kind of “digital gold”, so they say. However, others still look at it with distrust because of its high volatility. Digital Money
The behavior of crypto-currencies since the coronavirus crisis has followed the same pattern as other assets. A rise in February, a sharp fall in March and a subsequent recovery. The most used conversion pair in altcoin-dollar. The U.S. currency has not lived a good 2020. Some say it could be replaced as the world’s reserve currency. However, we have to see the whole picture. The truth is that the cryptos in this time of crisis have served as a refuge. Digital Money
Good deeds are never forgotten
According to Arturo Bris, Professor of Finance, International Institute for Management Development (IMD), the dollar is weak. “The stock markets have been very strange this year. We witnessed the fastest sale in history between February and March.
With the S&P 500 falling more than 30%, just to enjoy the best recovery in history. It reached an all-time high on August 21. Digital Money
The institutional investors and especially the pension funds have left the panic behind. Now knowing that the dollar is hit, they are completely reconsidering their long-term asset allocations.
“What we thought would be the biggest stock market crash in history has led to a fundamental rethinking of the key risks around financial investments.
For international investors in general, currency risk, especially the weakening of the dollar, has become the most important financial risk of the year. Despite the pandemic, it has even overshadowed their considerations about specific companies and sectors.
Poor currency performance
Today when the dollar is hit, capitals reconsider. According to Professor Bris for a European investor, for example, the US markets have performed poorly. Digital Money
About 5% in US dollar terms in the first eight months of 2020. Translated into euros, however, that yield is 0.5% due to the depreciation of the dollar in the last two months.
Some commentators wonder if the dollar might be in danger of losing its place as the world’s reserve currency. Thanks to this status, the dollar is used in most international financial transactions.
This gives the United States certain economic advantages. Such as the possibility of borrowing at a low price and having more margin of
maneuvering with its national balance sheet. Digital Money
An optimistic voice
In a recent interview for the Spanish state news agency the eToro spokesman spoke. Javier Molina pointed out that bitcoin – the most widely used crypto currency – is traded on regulated futures markets and that, being uncorrelated to the rest of the market, it can become a store of value, a “digital gold”.
In his opinion, “bitcoin is in an initial and very promising phase”.
“The capitalization of bitcoin is 2.5% of the value of gold. If people would trust this crypto-currency and it would reach 10%, we would have a great investment opportunity”. These are the words of Eurocoinpay’s CEO, Herminio Fernandez.
In this crisis caused by the expansion of the coronavirus, crypto-currencies have behaved similarly to other securities. They had a sharp fall in March and a subsequent recovery.
Not everything is pink
However, many experts have their doubts about these assets. XTB analyst Joaquin Robles noted that crypto-currenciesstill present the same problems as before the pandemic.
They cannot be considered safe haven assets in times of uncertainty. This view is shared by Stefan Hofrichter, chief economist of Allianz Global Investors.
Hofrichter argues that while their promoters consider them an active refuge, they are not “safe”. Their reliance on an algorithm adds up in terms of volatility.
Apparently, although the dollar is beaten and its return on investment is almost zero, it is still on the preference list.
To worry less
In general, we should not worry too much about the weaker dollar. It is still relatively strong. It appreciated by 17% against the euro between 2010 and 2020, even taking into account its current weakness. Overall, concerns about the future of the dollar as a global reserve currency are probably unfounded. Digital Money
The dollar is likely to rise as political uncertainties are resolved. That will happen sooner rather than later. “I think we’ve already seen the worst. The dollar has already risen slightly in recent days, although there could always be a slight depreciation in the
CRIXTO and his friends
The CRIXTO Web Service App is sensitive to these types of variations. It is affiliated with crypto investors. They know that there is not only the risk of volatility in altcoin. Fiat money is also subject to this possibility.
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Our north has always been in the usability of crypto currencies. Of course, as observers, we know that the dollar is not at its best. However, our double reserve makes us a safe investment tool. Digital Money
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