Fear, Greed and Money: Coronavirus Pandemic Changing the World

It appears that the coronavirus pandemic is not going to end soon. Fear and anxiety have skyrocketed, and almost half of the people in the United States feel like the COVID-19 has impacted their mental health. People are scared, anxious, depressed, on edge and struggling to sleep through the night.

We watched as China implemented extreme measures to improve the coronavirus crisis there. We watched as Italy went into total lockdown, and people scurried to other parts of Europe. We then watched California Govenor Gavin Newsom taking early measures for the U.S. and locking down the state. We watched again as New York became the epicenter of the crisis.

In places like Hong Kong, which did a good job containing the virus, people felt comfortable and went back to work, which led to reinfection. The same thing will happen around the world. In Australia, they are ready to keep crisis measures in place for six months. They get it.

An economic downturn has been expected for awhile, and the International Monetary Fund has announced that we are in a recession, but the numbers indicate that we are in a depression. We’ve seen the ghost cities in China and how its economy was so heavily invested in a real estate bubble which will one day pop. We’ve seen the national debt skyrocket here in the U.S. All that is just the tip of the iceberg.

Fear, uncertainty and doubt invoked by the coronavirus pandemic are wreaking economic havoc. Back in the 1920s and 1930s as the Great Depression set in, we were not worried about a third of the workforce being out of work because its jobs were regarded as nonessential. The problems are just beginning.

One analyst with CoinGenius conducted an experiment. He went into his bank branch and asked to withdraw $100,000 for personal reasons, as he told the bank teller. They would not give it to him, saying it would take at least two weeks. Did you know that when you deposit money into your bank you transfer the ownership of that money?

Now, add the coronavirus to the bowl. It has worsened the situation. In the U.S., the Defence Production Act has mobilized businesses — from Hanes to Tesla — in the fight against the COVID-19 pandemic, and the Stafford Act has given the federal government unprecedented powers.

The situation will alter human behavior. Once this is all over, the world will be very different. China will wield more soft power, more social capital and more economic power, as they’re already reopening manufacturing, shipping and distribution. The virus is merely a catalyst for something that has been a long time coming, a global financial crisis and a new global order.

As 2001, 2008, 2011 and this year show, when there is extreme market crush and the whole board is red — the Dow Jones Industrial Average is down, Treasurys are down, Bitcoin (BTC) was down and crude oil is down — people take to the sidelines to wait until the storm passes by. If you had to sell Bitcoin at $2,000 in order to feed your family or keep your house, you sold the Bitcoin at $2,000. It does not matter if you think it is going up or down because if you are not here tomorrow then it does not matter.

While everyone waits on the sidelines for now, soon a great reallocation will come. Until then, the U.S. dollar will gain strength, but that will reverse course when the country’s debt burden graces headlines. With Treasurys yielding negative returns, the safe havens of yours all of a sudden don’t look so safe. Reallocation will come quicker than it did in 2008.

The debt-based world we built can’t be saved. There is going to be pain. The challenge as a trader is developing a thesis you feel strongly about based on sound data and analytis, not emotion. Even then, the data invokes emotion. But you have to focus on education and your plan and stick to your thesis. All assets were down during the recent stock market crash as people want to see what will happen next.

The coronavirus stimulus is estimated in $6 trillion, and many expect it to rise to $10 trillion. That is a heap of U.S. dollars. Now compare it to the 21 million Bitcoin that will exist, much of which will be lost. Like gold and silver, Bitcoin is a commodity. It is worth what people are ready to pay for it. People will likely be ready to bet more for it on the other side of this crisis.

Wall Street will finally turn to alternative assets, and they have options beyond gold and silver. Now, they have Bitcoin and cryptocurrencies. The recent news have nudged them to consider these alternative assets. We are hearing talks about digital dollar and blockchain-based supply chains. Everyone is working from home and getting a feel for productivity applications like Slack and Zoom. Next, they will see the advantages of crypto, and the digital revolution will commence.

Many family offices and hedge funds worldwide realize the value of Bitcoin. These institutional backers bought Bitcoin when it tanked into the $4,000 range. More institutional capital will be poured into the industry as a diversification play, if not as a store of value. They are looking to diversify away from traditional assets. They want the U.S. dollar. And then, they’ll want commodities such as precious metals and cryptocurrencies such as Bitcoin. With that said, for now Bitcoin is not a proper safe haven. It is still a speculative hedge. That is why in times of extreme panic it will continue to lose value together with other assets.

Not only will cryptocurrencies gain wider recognition after the crisis, but so too will the underlying technology: blockchain. In California, fraudulent coronavirus test kits and masks on the market abound. A blockchain-based supply chain could bring long-waited transparency.

Information about the coronavirus pandemic could more efficiently be shared with a blockchain-based system. Now, regulators in disparate regions piece information together. An enterprise implementation of blockchain could make this information available in real time.

As we recover from this crisis, the public will need more trusted sources of information. They’ll want the transparency that blockchain brings. Entrepreneurs and large enterprises will collaborate on open-source projects which will build the standard for the next decade. People are talking about digital multiday voting if people can’t get to the polls due to the coronavirus pandemic. Such voting arrangements may be a threat to democracy. Secure digital blockchain-powered voting could diminish the risk of election fraud.

Another challenge is staying positive during these tough times. Humans are probably the most social creatures. We need social contact, and we want to look each other in the eyes. Thankfully, technology allows us to do that. If you are scared, anxious, depressed, on edge and struggling to sleep through the night, know you’re not in this alone. And new technologies would help to bring people together and share information about the situation in which we are now.