I communicate with many people recently, and the most asked question is – is it right time to buy now? For example, the airline industry is in decline, is it worth it to invest there? Technically, maybe, but will you do it if I’ll tell you that Warren Buffet is now selling airline shares?
Many think that virus is very close to its highest point and it would be great to gain on that if it soon going to vanish. That it is going to be V-shaped recovery.
I think otherwise. The crisis was expected already before COVID-19. The virus just pulled the trigger, making it much worse, and it won’t dissolve as quickly as everyone thinks. Most of us just don’t want to accept that this situation has made such tremendous changes in our lives, and some of those changes will stay in the future as well.
The fight with the new coronavirus is the main topic everywhere, countries are quickly adapting to the situation, taking necessary actions to reduce the spread and impact of the virus. Still, ALL THESE PROCESSES to deal with the situation and the impact of this situation TAKE TIME. Time to create working vaccine, for example. Even though scientists may advance with producing a drug, it won’t instantly help to lift quarantines across the world. So, the medicine can help to treat the virus but won’t help to stop the spread of COVID-19 immediately. Just have a look at rising numbers piling up from all around the world. As long as this virus is on the streets, the economy will not be able to run at full capacity!
Let’s have a look at COVID-19 cases in Singapore, since they are doing rather well in the fight against the virus. Can you be relaxed seeing these figures and be ready to lift any restrictions? The new cases appear every day and the information of contamination is not traceable.
So, it is rather safe to say that this will not go away quickly. Besides, we can’t underestimate the psychological impact on people. In my opinion it is huge. The consumer sentiment is sinking deeper and deeper and it can’t be lifted by low interest rates of the Central Bank. A person doesn’t decide whether go to a restaurant or cinema based on reduced interest rates. Therefore, the consumer sentiment is at historically low levels. The same way as the manufacturing sector. The economy can’t show signs of healthiness if it is not in such circumstances.
The latest unemployment figures only confirm the above. Those rates definitely will start to rise, and this figure always has been a bad sign for the market.
As you can see - every time unemployment starts to rise - the market is experiencing a decline. I see no reason to be different this time. Global GDP forecasts are also poor, rather close to real I would say. The Federal Reserve acts immediately stimulating the market at an unprecedented rate and volume. As I mentioned in a previous blog post, the Federal Reserve's "balance sheet" has simply exploded, and I am sure it will only continue to grow.
Is this the right way to deal with the situation? I don’t know. I only know that such model regularly experiences turbulence and is highly cyclical, creating new bubbles and new risks along the way. However, during the previous crisis, something new and interesting happened, something new emerged, different – cryptocurrency, or to be more precise – Bitcoin.
So, if someone asks me what to buy now, I will say that one of the options is Bitcoin. Many have heard of BTC and know what it is. I have been following the development of BTC for a long time, even was invited as a guest speaker on the topic at real estate conference in Riga in 2018. My presentation “BLOCKCHAIN REACTION. How will the new technology affect the development of the real estate market.” soon will be available on Slideshare, I just need to adapt it to English and upload. Once it will be done, I’ll add the link here.
This technology has many advantages and opportunities, it can be a currency, an exchange instrument, an accounting mechanism, a tokenization mechanism (which is generally new), an accumulation instrument, and so on. The possibilities are practically limitless. It is relatively easy and fast to make a BTC transaction from anywhere in the world to any place, if you have an internet connection, of course. Commissions are small and the same for everyone as oppose to bank transactions which are usually more time-consuming and more expensive.
The cryptocurrencies industry has already experienced a number of ups and downs, including all sorts of "scam" projects, due to which the industry is viewed with great skepticism. Nevertheless, it has accumulated great minds and resources to be able to survive. And it doesn’t matter whether you fully understand how cryptocurrencies work or not you still can use and benefit from it. For example, do you think everyone understands how internet works? Still, everyone uses it without any interest in technical aspect of it as long as it works. The same will be with blockchain and crypto. Were any of you able to predict such rapid growth of the Internet and such digitization? And digital currency is a natural next step in digital age, where we can talk about the digital assets. In fact, the current youngsters understand and values digital assets even more than traditional assets. They live in a digital environment and consume and use all sorts of digital products, services, and tools.
Prior this, all generations earned and retained its capital through real estate, or securities. Now all of this have become too “expensive”. Cryptocurrency is the real opportunity for current new generation. The alternative where they feel more secure and more confident than their parents.
I don’t want to endorse you to buy BTC right now, especially when I think that any BTC transaction contain 100% of risk. There won’t be middle ground here, in my opinion. Either the industry will rise and shine or face the end of it, at least in this particular form.
Still, bear in mind that the cryptocurrencies were born in the previous crisis. Now it is time for the industry to prove itself. Since BTC is a very hot topic at the moment, my next blog post will be dedicated to BTC.
So, there’s more to come, stay tuned!
Agris