- A new report from the Bank for International Settlements states that the coronavirus pandemic will encourage the adaptation of cryptocurrencies.
- According to the report, both central bank-based digital currencies (CBDC) and Bitcoin, Ethereum (ETH) or XRP could benefit.
The spread of coronavirus is increasing worldwide, but many countries are reporting stagnating infection rates and an improvement in the general situation. Since the coronavirus can also be passed on through the handing over of cash, a new report by the Bank for International Settlements (BIS), also known as the “Central Bank of Central Banks”, has therefore examined the fear or current mood towards cash in connection with corona.
Coronavirus can promote adaptation of Bitcoin, Ethereum and Ripple (XRP)
According to the report, there is great fear among the population of becoming infected with the Covid-19 through cash. That is why the demand in the news for cash alternatives has grown steadily until today. Although the chance of the virus being transmitted by cash is considered very low by doctors, as recent studies confirm, the BIS describes that the demand for a cash alternative can grow rapidly:
The pandemic may hence put calls for CBDCs into sharper focus, highlighting the value of having access to diverse means of payments, and the need for any means of payments to be resilient against a broad range of threats.
It is reassuring that the BIS also concludes that to date there are no known cases of Covid-19 being transferred in cash. This could only be the case if an infected person sneezes on the note immediately before passing it on, summarises Dr Christine Tait-Burkard, an expert on infection and immunity at the Roslin Institute of Edinburgh University.
Many central banks worldwide are already piloting the use of a CBDC or are in the development phase. The most advanced is China, which is already testing the use of the digital yuan in some provinces of the country. The official launch of the CBDC is planned for the second quarter of this year and could have previously unknown effects on the economy and the population.
Recent research has shown that more than 40 central banks around the world are already working on the development of a CBDC, mainly from countries with weak economies. Corona will drive up inflation significantly as the economy collapses and central banks are forced to pump vast amounts of new money into the market.
The FED will pump 700 billion USD and the ECB more than 750 billion Euro into the market to stimulate the economy. These measures lead to a continuing devaluation of money, so that in some countries the population is fleeing to other assets such as Bitcoin, Ethereum or XRP.
In Venezuela, Hong Kong or Argentina, the trading volume for Bitcoin and other cryptocurrencies such as ETH or XRP has risen to new record levels due to rising inflation. As a result of the flooding of the market with new money, new capital also flows into cryptocurrencies, so that BTC, ETH and XRP benefit from rising prices.
Bitcoin, ETH and XRP rise
Although Bitcoin, Ether and XRP are still far from their former all-time highs, the financial injection from central banks is helping and catapults the Bitcoin price above the $7,000 mark, at the time of writing $7,080.72. ETH also records a price increase of 5.66 % within the last 24 hours, to a price of $150.08 and XRP rises 3.21 % to $0.19.