One of the best ways to perceive the present global economic situation, as well as its potential for change in either direction, is to use the analogy of a sports injury. In this case, the athlete is the world and the injury is the global COVID-19 coronavirus pandemic that hit in full force in March 2020. At that point, the world was, like any athlete that will soon be injured, totally unaware of any impending danger. Yet, the same danger appeared there and hit the atmosphere with full force. Now, like the world, the athlete was stopped in his track and left on the ground. Just like that, the world economy, mimicking the action of the numerous nations that join together to form that entity, stopped abruptly.
It saw, for the first time outside of active combat zones in wars, the full and total stop to a range of business. Yet, similar to the injury, it did not feel that bad in the start – after all, like the athlete, the global economy was in relatively safe watchers at the end of 2019. But, the injury was catastrophic and as the body of the athlete begins to cool down, so does the pain appear. Then, it begins to grow in intensity. Presently, the world is entering that phase as the economic impact grows not just in clarity, but also in intensity.
That is why there is no more dilemma about how hard will the global economy suffer. Because of that, the projections of recession are now and truly in a depression phase, with the recovery to the level of the previous year lasting at least 24 months for strong and versatile economies like that of Germany. The cryptocurrency markets are also bouncing up and down, but many analysts, both crypto and traditional one, see the coming period as an opportunity. It could, potentially, be a complete game-changer not just for the bitcoin network as the biggest cryptocurrency, but also other smaller ones as well.
The Organization for Economic Co-operation and Development recently published a very concerning report about the future of the global economy. In it, the OECD secretary-general, Angel Gurría, states that the economic shock that the world took on at this moment already towers over the 2008 financial crisis in the long-term. Now, the organization is positive that the world will take years to fully recover from the COVID-19 coronavirus pandemic.
He also said that in many quarters, there are examples of a huge amount of wishful thinking that the world will quickly bounce back, just like individual nations. This is why, in a somewhat of a mute move, the OECD called on national governments to increase spending to help the speedy test process as well as the virus treatment projects. However, these developments remain on a very predefined timeline. Presently, it appears that the COVID-19 severity is weakening in countries that got introduced to it earlier, but it is still wreaking havoc in the US and as of recently, Brazil.
Outlook for Depression
The head of OECD stated that no matter the pandemic outcome, the world will be dealing with the economic outlook for years, if not the entire decade. Major economies of the globe are looking at a recession in the third quarter, fueled by a persistent decline in Q1 and especially the devastating Q2. The direct and immediate effect of the crisis is already bigger in the metrics than the 9/11 terror attacks and the 2008 financial meltdown.
The main concern is the space of employment and its diminishing potential. This week, airlines alone across Europe and the US began plans for layoffs and cost-cutting. In the UK for example, politicians are warning that British Airways is using this opportunity to cut down on its staff and the income of the remaining force. Yet, no one can deny that airlines will go bankrupt if they do not do something. At the same time, the danger of inflation lingers on and even grows with every semi-successful or completely failed fiscal stimulus program.
Bitcoin on the Rise
The instability is slowly but evidently propping up bitcoin. The price of BTC has been standing firm in the 9,000 USD range with the breakout moment in the air since mid-May. The same moment will occur likely before the end of summer and trigger a bull run. Its potential and finishing line are anyone’s guess, but the world is in the post-halving moment and history is on the side of BTC. The money from the numerous fiscal stimulus went to the crypto domain, allowing for a substantial boost in adoption.
Furthermore, being that this is 2020, the key element in previous bull runs of some kind of financial institutional adoption does not seem so important anymore. The public confidence in these bodies has been eroded even before the pandemic difficulties. Sadly, the impact of bitcoin development will not make much difference in the coming years. Like esports and other digital ventures, even a bull run-fueled development drive will likely employ people in low four-digits globally.
Across different regions of the world, bitcoin does not possess a universal supremacy. A strong bull run will not establish it either in 2020, no matter how dire the outlook for the traditional markets might be. Instead, because of many local factors, other major digital currencies hold the dominant position or play a close-second role. There is also a strong sense these are on the rise as well, especially the top 10 most successful ones.
Ethereum network has been quietly building stability and strength as the second-biggest cryptocurrency. Dash and other big digital currencies are also finding their adopters in many places in an unstable world. This means that the year if there is a bull run with BTC, will also see the ascendance of at least some of these. Unlike 2017, experts believe that this time around, their gains might be a lot more sustainable than they were four years ago. All of that would further feed into the strong crypto season coming in 2020.