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second wave of contagion
Stock Market

How the second wave of contagion will affect the cost of the cryptocurrency

27.02.2021
2 min read

How likely is a second wave of contagion and its impact on assets

The world is facing hard times. The global decline in demand, economic crises, the second wave of contagion and strained relations between countries are negatively affecting stock markets. The cost of cryptocurrency is also suffering, and it is important to understand how it will change in the course of events.
The coronavirus pandemic has collapsed financial markets, world indices and shares of large corporations have slipped. Following them, the cryptocurrency also became cheaper, which showed a close correlation of electronic money with traditional assets.
After the March collapse, the markets recovered slightly, the S&P500 index rose to 3000 points after falling to 2200. Bitcoin’s business is even better. In March, it fell to $3,800, and in less than 2 months it recovered to its previous level of $8,000, now the price of the main digital currency is $9200.
However, experts are quite skeptical about such market success. They are afraid that the second wave of contagion will again lead to large-scale collapses. Already recorded strong outbreaks in the U.S., the number of diseased has exceeded record highs, Beijing introduces a state of emergency due to new cases of Covid-19. Schools and kindergartens have been closed again, and people have been asked to maintain a regime of self-isolation.
If the situation worsens, one can expect changes in the cryptocurrency market. At the same time, stock exchanges will be the first to react – shares will become cheaper, and after that the quotes of electronic assets will decrease. And if at the beginning of the year it took time for investors to react to the situation correctly, now they will start acting proactively and it is possible to withdraw capital before the quarantine measures are officially announced. Experts say that some participants are already considering the emergence of a new wave of Covid-19, and are trying to save cash. This is confirmed by the correction data, which has been fixed in the markets for some time. Bitcoin for the week showed a decline of 10%, and its value is 9050 dollars. Futures on the S&P500 index, which also fell by 8%, fell to 2960 points.

second wave of contagion

Analysts are also considering a possible decline in oil and commodities quotations. It is likely that Bitcoin will start to lose value following the stock markets, as it was already in March and April.
And a new outbreak may turn out to be more serious than it was before, so investors are clearly monitoring the situation in order to respond quickly and change their strategy.
Despite its dependence on the stock market, the cryptocurrency may also behave differently from the rest of the conjuncture, which makes it a profitable asset in an investor’s portfolio. Electronic money protects against the risk of inflation and economic shocks.

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