Opinion The Flood of Fiat Currencies is Supporting Crypto Adoption

The Flood of Fiat Currencies is Supporting Crypto Adoption

April 11, 2020

As the glimmers of the end of the present wave of the COVID-19 pandemic begin to show, the governments around the world are gearing up for some spending. The same spending will be on a practically unprecedented level in not just modern history, but in its entirety, even when adjusted for inflation. Today, unlike for example after WW2 or during the Great Depression, practically all developed and developing countries will be in a similar boat in just under half a year.

The speed with which the pandemic took over the world also made all of those governments responsible to act as quickly as possible to prop up their economies. The US Federal Reserve recently announced a lending program worth 2.3 trillion USD, aimed at providing stability to the coronavirus-stricken finance and overall economy of the country. Across the Atlantic, the Bank of England announced that it will most likely extend billions of pounds to finance directly the crisis response of the UK government.

Expectedly, the level of spending is also inspiring inflation. This is happening not just in the mentioned nations but across the world. This is, also expectedly, pushing up the demand for any alternatives to the same fiat currencies, which now includes the field of cryptocurrencies as well, more precisely BTC.

Quantitative Easing

Presently, the governments of the world are fighting two battles – one is against the norovirus while the other is against the economic pressures the first battle is creating. There is no need to underline just how damaging the struggle against the virus has been so far. With social distancing as the only effective measure at the present time, it is the tool of choice all are using, starting with India and going all the way to the US.

Naturally, the process is closing businesses and leaving people jobless or in a situation where they are certain that it is only a matter of time before they are laid off. This is why the governments need also to figure out a means to support their citizens but also find a way to get them back to work as fast as possible. In that setup, quantitative easing appears to be a clear choice for many – here, the governments and their central banks are pumping money directly into the national economies.

The process of quantitative easing that will become more or less constant will impact the markets without any doubt. In this setup, bitcoin should be able to quickly gain the upper hand in adoption. The same is going to become even more prevalent when similar measures begin in earnest in all of the major economies.

People’s Bank of China

Like always in the global domain of cryptocurrencies, the People’s Bank of China is a huge factor in any process of change. This time around it is crucial as well thanks to the expected measures that the government will undertake to prop up the economy and help its citizens in the post-coronavirus period. While so far the nation managed to curb its rate of infections and deaths, it has still seen a big problem in its economic output.

This comes only a few years after the struggles with the growth of the domestic economy that included several very painful devaluations of the local currency yuan. So, a Chinese stimulus package must be in the works. In fact, many experts believe that it is well on its way and should be announced at any moment. But, in a country that embraces things like mobile device payments, esports, and social credits, some expect that the stimulus package will be distributed using a native PBoC digital currency.

The bank has been developing such an option for some time now and experts are certain that many inside of the bank, as well as in the government, want to see it push out this landmark project as soon as possible. The present situation seemingly offers the perfect moment to do so. Of course, the benefit of that for the crypto networks would be immense if the Libra factor is taken into consideration – in 2019, the very mention that Facebook is developing its own cryptocurrency skyrocketed the crypto prices in just a couple of weeks.

Incoming Halving

Throughout all of this, the May halving of the bitcoin network is still inbound. It will once again demonstrate to the public that there is only 21 million bitcoin and not a single additional one will ever be made. This is going to resonate in the climate of the fiat currencies flooding the countries and many individuals and families looking to turn some of that money into other resources that provide a bit more combined stability.

For a lack of a better term, the halving process is a great marketing push for the general public perception of cryptocurrencies. As the price of bitcoin rises, so will people, now with additional funds, flock to buy a bit of it, just in case.


Like in every major economic situation, the entire process of quantitative easing in individual countries and across the world is half-change. Presently no one has any idea when will the pandemic end and what will the actual end look like, besides the possibility of a very fast and very successful vaccine. This alternative, however, does not look likely so the world is in the dark on the issue of both longevity and impact of the crisis.

This is why the present projections related to the possibility of a rise in bitcoin adoption are also possible, but nowhere near certain. Instead, they are all plausible in a time when so many other things are possible as well. One thing is certain – the economic outlook of the entire world is growing grimmer by the day. In that atmosphere, having an alternative to bitcoin is not a bad thing and the money that will flood the system will see some of it go to the cryptocurrency. That is good news for the crypto networks, regardless of what precise shape that adoption will take on.