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  • The financial crisis will destroy the existing monetary order.
  • Bitcoin will have a chance for widespread adoption. 

BitMEX published a research paper devoted to the consequences of coronavirus pandemic for the global economy and financial markets. The experts of the world’s largest platform for trading cryptocurrency derivatives believe that the inevitable crisis will unleash inflation and change the global world order forever, opening the way for cryptocurrency adoption. 

They wrote in the Twitter announcement of the report:

The response to Coronavirus will mark a significant economic regime change, from monetary policy to central bank funded fiscal expansion. Eventually, there will be one clear winner under this new regime: inflation

They put the stock market crash caused coronavirus outbreak alongside the largest crashes in history, including the economic crisis of 2008, Black Monday of 1987 and a stock market crash of 1929. Moreover, today’s situation is aggravated by the fact that asset managers and investors are more leveraged than ever.

There is now little doubt that in financial terms, the Coronavirus crisis of 2020 is one for the history books. Asset managers, who went into the crisis more leveraged than ever, are in a desperate race to obtain US Dollars, sending almost all asset prices spiralling downwards, from equities to commodities and non-government bonds to cryptocurrencies.

BitMEX believes that measures taken by policymakers and governments are not nearly enough. Moreover, aggressive stimulus and accommodative monetary policy of the US FED and other global central banks might have created a precondition for the financial crisis.  They emphasize that the regulators lowered rates during each crisis. 

However, it is now becoming clearer and clearer, this is the last major throw of the dice from central bankers. Monetary policy will not be enough.

Markets across the board reacted with major sell-off, which is a natural development due to high volatility and uncertainty. However, BitMEX believes, that at the end of the day the crisis will be beneficial to cryptocurrencies. 

Where the Bitcoin price may shine is in the volatile inflationary aftermath of the response to the crash. In our view, in this changed economic regime, where the economy and financial markets are set loose, with no significant anchor at all, not even inflation targeting, it could be the biggest opportunity Bitcoin has seen, in its short lifetime.