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Cyber Bitcoin
From Coindesk's Chinese, governments around the world are currently ramping up government spending.

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The U.S. Federal Reserve on Thursday announced a credit program of up to $2.3 trillion to stabilize the outbreak-hit U.S. economy. The Bank of England (BoE) has announced the possibility of issuing billions of additional pounds as a reserve for the UK government to respond to the crisis.

These initiatives have sparked inflationary fears around the world, and it also appears to be driving demand for bitcoin in some regions. Deng Di, a leading member of the China Blockchain Application Center and the National Internet Finance Association of China said,

Ongoing quantitative easing initiatives will ultimately affect the market in the medium and long term. Bitcoin is designed to address this situation. As a result, I am personally very bullish on the prospects for bitcoin.

China is also expected to announce an economic stimulus package. Deng said he expects the People's Bank of China (PBC) to use the digital currency for its economic stimulus program.

Despite the fact that central banks are continually lending money, bitcoin will always be capped at 21 million issues. Some have pointed to the halving of bitcoin blockchain rewards, which is expected to happen in May, as an act of quantitative austerity.

Overall, dozens of countries are reassessing the currencies and industries on which they depend. At the same time, the number of individual users investing in cryptocurrencies has surged in some countries with high local currency volatility, such as Argentina and Russia. Gleb Kostarev, head of Coinan's Russian operations said,

We see a steep increase in Russian interest in cryptocurrencies. The ruble has depreciated a lot in 2020. In addition, Russian authorities will introduce new rules for taxing interest on bank deposits starting next year, which will encourage people to withdraw their funds from banks.

Bitcoin was not the most important asset during the widespread recession. However, recent trends in Bitcoin highlight the impact of the global situation on local areas. In areas where trust in banks has historically been low, many families are considering bitcoin as one of the more trustworthy assets than local French currency.

Speculators' market

Some critics may have seen the waning volatility of bitcoin at the start of the economic crisis triggered by the new crown epidemic.

However, the institutional sell-off and the subsequent trading spike led to the emergence of more newly distributed, new use cases and liquid options, and substantial profits for cryptocurrency companies.

Marius Reitz, managing director of Luno, an Africa-based cryptocurrency exchange said the number of new registrations in the first quarter of 2020 increased by 25 percent compared to the fourth quarter of 2019. Of these, thousands of new users came from Nigeria, South Africa, Zambia and Uganda. He added that the volume of cryptocurrency transactions has doubled across the continent. Reitz said,

People see this as an opportunity, i.e., to recoup their previous losses [suffered in traditional markets] through bitcoin. It's still a speculator's market.

Reitz said that in March, a stronger correlation emerged between gold and bitcoin in the African market. Overall, the distribution of bitcoin seems to have been more fragmented during the epidemic-induced recession.

According to asset management and research firm, Bitwise, almost all exchanges saw an increase in trading volume in March, with North American exchanges such as Coinbase, Kraken and Gemini seeing the largest increases, according to Pierre Rochard, a bitcoin analyst at Kraken, which saw a three-fold increase in the number of new users verified in March compared to the previous month. Rochard said,

These are new users who don't hold any cryptocurrencies.

The cryptocurrency price is not the only indicator of bitcoin's performance. According to Coin Metrics, the number of active Bitcoin wallet addresses has now reached the levels seen during the September 2017 bull market. At September 29, 2017, the number of active accounts was 718,184 and at March 30, 2020, it was approximately 770,915.

While bitcoin's price has plummeted 40 percent from $9,160 in early March, its price had recovered to around $7,000 as of the date of publication. In response, Luno Exchange's Reitz said that Bitcoin was less affected and recovered more quickly than other asset classes.

The co-founder of cryptocurrency hosting company Anchorage, Diogo Monica, said the institutions that dumped cryptocurrencies in March quickly bought them back. In addition, Mike Belshe, CEO of BitGo, said that his managed startup's borrowing business (used to enter long positions) was so large in March that he doubled the size of his cryptocurrency lending business team. During the recession, exchanges and custodians were actually profitable.

During the market crash, speculative cryptocurrency trading surged and demand for escrow soared, with the CEO of Ledger, Pascal Gauthier saying that sales of hardware wallets were up "double digits" in the first quarter of 2020 compared to the same period last year, and that their sales were accelerating. Gauthier added,

We're increasing our hardware [wallet] production.

With the influx of speculative traders, more and more Latin Americans are using bitcoin for savings or loans.

Latin America

Sebastian Serrano, the CEO of Ripio said,

Bitcoin is mainly used for savings... people are looking for security. On Sunday, Argentina was on the verge of default.

Serrano's company in Latin America offers cryptocurrency loans and trading services.

Argentina is not the only country on the verge of default, as are Lebanon, Ecuador and Venezuela. Bitcoin holders in Lebanon are also concerned about bitcoin savings because they distrust banks as much as Latin Americans.

Jorge Luis Farias, the CEO of Cryptobuyer said orders for cryptocurrency POS machines doubled in March, mainly from Venezuela. He also shipped three brand new Bitcoin ATMs to Chile, where the Chilean peso fell to an all-time low in March.

Subsequently, in the first week of April, LocalBitcoins hit an all-time high of $371,063 in transactions in Chile. Jorge said,

More and more people are looking for other collection tools," Farias said on April 7, "and last week alone, we received 100 inquiries for new [POS equipment].

Mauricio Di Bartolomeo, a Venezuelan expatriate and co-founder of cryptocurrency lending startup Ledn said the number of Mexican and Argentine users of the platform's bitcoin savings accounts is growing. He said that if you count the dollar or stablecoin lending business secured by bitcoin, 60 percent of Ledn's new users are from Latin America and only about 16 percent are from North America. The number of users of the platform has reached tens of thousands and has doubled in the last six months.

I think it has to do with the economic situation in Argentina and Mexico. The Mexican peso had previously experienced a significant devaluation." Bartolomeo said, "Based on our expectations, Latin Americans will need large amounts of non-national currency to store value.

If Bitcoin's savings and lending rates remain stable during the global economic crisis, this would be a more positive sign than the cryptocurrency's rising price.


At the same time, in response to the economic downturn, some Asian countries are increasing their economic dependence on each other.

In March, Shanghai Cooperation Organization (SCO) members China, Russia, Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan agreed to use their currencies instead of the US dollar for bilateral trade and to issue bonds. Deng Di said Beijing's goal is for the Chinese yuan to become a regional currency and then a global currency like the US dollar. He said,

The central bank digital currency issued by China will accelerate the process.

The cryptocurrency industry can provide the infrastructure for this. Kazakh entrepreneur, Tilektes Adambekov said in April that he was still working on establishing a regional cryptocurrency exchange that would eventually include "French currency exchanges and securities-based tokens," though these plans are not specific to Chinese digital currencies.

In January, Adambakov said at a meeting with Chinese business partners,

Under the One Belt One Road Global Development Strategy, the Asian region will follow global initiatives.

But in the case of bitcoin itself, traders in the aforementioned markets sometimes sell cryptocurrencies to invest in real estate, especially with the current extreme volatility in the oil and bond markets.

Middle East

While stocks and bonds fell, gold, oil and real estate investments and bitcoin trading all seemed to increase.

Makram Hani, CEO of Arms & McGregor International Realty said his company is closing a Dubai real estate deal worth $140 million. The buyer is an Asian man who uses a variety of cryptocurrencies to pay.

Hani said hundreds of potential customers have expressed interest in using cryptocurrencies to buy property, with the most popular locations being Dubai, London and Berlin. In more regulated countries, bitcoin holders seem to want to hedge their liquidity by investing in traditional assets, while bitcoin holders in the Middle East are willing to accept large amounts of cryptocurrencies. Hani said,

We've seen a significant increase in real estate transactions paid for in bitcoin or other forms of currency.

Rain's co-founder, Yehia Badawy is also serving Bitcoin holders in Dubai through an exchange based on the Bahrain island. He said that from January to March 2020, the volume of transactions increased twofold. New user registrations increased by 34%, driven by "mass microtransactions". He said,

People are still trying to figure out, the durability of [economic] change.

Bahrain, Saudi Arabia and Qatar are struggling to maintain investor confidence in their debt as the oil market plunges. The collapse of the oil market could have serious repercussions for weaker countries such as Lebanon and Iraq. These two countries were already in huge foreign debt before the outbreak of the epidemic.

Mikhail Kholodov, an oil market expert at MOL-Russ LLC said the current global market is "highly speculative", like hot money in a casino, and will not rebalance in the near term.

As more and more investors go into panic, some have juxtaposed bitcoin with tangible investments like gold and real estate.

In an article, the director of digital asset analysis at investment firm VanEck wrote that, at least in the short term, between outbreaks, "Bitcoin's correlation with gold has increased significantly."

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