Genesis Mining Service Operations Director Philip Salter is convinced that the deepening economic crisis will increase the popularity of Bitcoin as a tool for hedging the risks of the banking system and increase the value of cryptocurrencies. It is reported by Cointelegraph.
The manager of the popular cloud mining service shared his thoughts and said that all this is no different from traditional markets - you have to sell everything to pay off debts and continue working. Miners must pay for electricity, cover other operating costs. Since your expenses are denominated in dollars, you need to sell more "falling Bitcoins" in order to continue operations.
Discussing the short-term prospects of the industry with the publication, the expert agreed that miners played a key role in the recent market crash.
In this regard, he stated that if the economic crisis can be prevented, there will be no major changes with Bitcoin. However, if a real crash happens, interest in the first cryptocurrency will skyrocket, as it will be seen as a hedging tool against the risks of the banking system. If there is more skepticism about the old economy, there is more interest in Bitcoin.
Thus, during periods of rapid market decline, the pressure on the supply of Bitcoin from miners can increase like a snowball, which inevitably pushes the price lower and lower. However, at some point, miners can simply turn off the equipment until the price recovers to breakeven.
Recall, that earlier specialists at the BitMEX crypto-derivative exchange research unit have analyzed the impact of the coronavirus pandemic on financial markets. Analysts said the market’s response to the virus will mark a significant change in the economic structure. You can read about this in our article.