The economic turmoil and financial collapse witnessed over the past month seem to be far from reaching their end.
With a pandemic crippling the present-day world order, many people believe that the crypto-industry should look to take advantage of the current market situation in an attempt to try and improve certain areas of the industry.
During a recent interview with Block TV, Stephen Stonberg, CFO at Bittrex Global, commented that he believes that high levels of volatility had effected all sorts of financial markets, adding that during certain periods, the volatility reciprocated by the traditional markets is higher than the crypto-markets.
With major traditional markets currently inactive due to panic sell volume and the COVID-19 spread, Stonberg believes that the 24-hour market of crypto could necessarily get the attention of traditional market investors. He stated,
“The crypto markets can really react to the volatility and absorb it as price moves 24×7. It is going to be very interesting to see how market sentimentality and behavioral patterns in investing in a lot of different asset classes change this time.”
Crypto-assets recovering on their own, unlike Traditional Markets
Stonberg’s comments on the possible shift in terms of investing from the traditional asset class to the digital asset sector are not inaccurate.
The stock markets are suffering tremendously at the moment.
A quick fact check would reveal that the U.S stock market witnessed one of the quickest declines between 19 February and 23 March. A total loss of 33.9 percent was observed on the S&P 500, but it was followed by a 17.5 percent rise from 24 to 26 March. Bitcoin has been less volatile over the same time period.
With the traditional market crumbling, the issuance of new investment-grade bonds from the government was inevitable. Over the month of March, the governments’ stimulus plan in the United States enabled over 40 companies to issue over $100 billion in IG bonds. With respect to previous trends, there was more issuance over the past week, than in 9 months out of 12 in 2019.
In light of that scenario, Bitcoin and other collective assets are recovering on their own, at press time, with little to no external aid. Although Bitcoin’s correlation with stocks increased over the last month, the digital asset hasn’t caved into a downfall, alongside the traditional asset class.
Hence, there is a possibility that a certain group of investors may re-evaluate their portfolios and positions in the market and improve their share in terms of crypto-assets.