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Cryptocurrency Market Capitalizations
- Coinbase cards integrate Google Pay adding another level of convenience
- Investors are aiming to be liquid in cash causing even safe-haven assets to selloff
- Bitcoin’s most important use-case of financial autonomy gets highlighted in this crisis
Coinbase Card Users Can Now Link Their Cards to Google Pay
Coinbase has announced on Tuesday that Android users can now add their Coinbase Cards to users’ Google Pay Wallets. This allows users to pay with their cryptocurrency at dozens of major retailers including McDonald’s, Dunkin Donuts, Walgreens, Trader Joes, and many more.
This means that Coinbase cardholders can also now pay with their cryptocurrency through any device that is capable of using Google Pay such as smartphones, smartwatches, or even Google Home, Google’s home voice assistant.
In April 2019, Coinbase officially launched its Coinbase Visa debit card for U.K. and European customers. Users could then use their cards to buy everyday goods and services with a limit of up to $12,100 a day. Payments are made using the cryptocurrency in their Coinbase account. When the cardholder uses their card the necessary amount of cryptocurrency is converted into fiat.
The card allows for the use of Bitcoin, Ethereum, Litecoin (LTC), Bitcoin Cash, XRP, Basic Attention Token (BAT), and Stellar Lumens (XLM). Users with any of these cryptocurrencies may buy normal items or services.
While the card could already be used in any location that accepts a visa, this new Google Pay integration allows for a new level of convenience. Coinbase also said that people will be able to use their cryptocurrency through Google Pay before their card even arrives.
Coinbase said in its announcement that “Google Pay gives Coinbase Card customers a fast, secure way to pay using their smartphones, smartwatches, and other Google Pay-enabled devices. With Google Pay, Android users can pay for everything from daily travel to end-of-year getaways using their crypto in the safest possible way.”
Countries that will have immediate access to this new feature are the United Kingdom, Republic of Ireland, Belgium, Finland, France, Italy, Slovakia, Spain, Croatia, Czech Republic, Poland, Denmark, Norway, and Sweden. Other countries are expected to be added later in the year.
Coronavirus: Bitcoin’s Biggest Test
While markets have weathered many storms, a new test has been given to them: The coronavirus selloff. In many ways this new selloff and panic are unprecedented. The S&P 500 volatility index (VIX) has reached mid-market levels just shy of the peak it reached during the 2008 financial crisis. The VIX’s market-close numbers have actually beaten those of 2008 peaks.
Another unprecedented event, and perhaps the most startling, is the speed at which this decline has occurred. In 2007 the S&P 500 reached a peak of $1,560 on October 9th, 2007. Since that date, the S&P 500 fell 885 points over 519 days to its trough of $675 on March 9th, 2009.
To compare, the S&P 500 reached a peak of $3,386 on February 19th, 2020. Since this peak, the S&P 500 fell 998 points to its current lowest trough of $2,388 on March 16th, 2020. In just 26 days the S&P 500 lost 998 points.
To summarize, the S&P 500 lost 885 points in 519 days during the 2008 crisis while this current selloff saw 998 points in 26 days.
What does this mean for Bitcoin? With this selloff being unprecedented in a number of ways, we are seeing the market react in a not so typical fashion. Some have recently started to think of Bitcoin as a safe-haven asset along with precious metals, bonds, treasury bills, and also cash. These assets tend to have an inverse correlation with equities and other risk assets like real estate, high-yield bonds, and currencies.
During this selloff, these safe-haven assets have not had an inverse correlation at all. In fact, gold has dropped around 12% since this selloff began. Another safe-haven asset, the short-term bond ETF, IGSB, has also fallen over 12% since this selloff began.
Bitcoin has also seen significant selloffs amidst this panic. Since the market selloff began Bitcoin has fallen over 30% from almost $9,600 down to its price at the time of writing of almost $6,700. Of course, this volatility is nothing abnormal for the cryptocurrency.
The intense selling of safe-haven assets points to individuals wanting to be liquid in cash, likely due to fear that the coronavirus could continue to make matters worse for the economy.
A more scary indicator of how the economy is faring is large withdrawals from banks. Some branches of U.S. banks and credit unions have started to run low on cash. Some banks have even begun to limit withdrawals for their clients, leading some to lose faith in their banking institutions and their real level of liquidity.
While a true run on the banks seems premature to predict, there are still concerns. As history has shown us, these things have the tendency to snowball. It’s important to understand that banks in the United States are only required to keep 10% of deposits. The rest they generally loan out for interest. While all banks are federally insured up to $250,000, the same cannot be said about credit unions. Some credit unions are not federally insured and are privately insured at varying amounts.
This is where Bitcoin comes in. Banks may shut down amid coronavirus fears. Bitcoin never shuts down. Banks may limit the amount of your own money you can take out of your account. Bitcoin has no transaction limits. Banks may not allow you to make certain transactions based on their own philosophies (A good example of this is TD Bank not allowing its users to withdraw to crypto sites like Coinbase). Bitcoin allows you to be completely autonomous with your own money and has no discretion on how you spend it, for better or worse. Banks are only required to hold 10% of all deposits. With Bitcoin, you are in charge of your own money and can safely store them with the right steps.
While all these things are true, Bitcoin is still widely volatile, barely usable as an everyday currency, not scaled to the level of Visa (V) or Mastercard (MA), and still considered unsafe to use. That said, these are issues that are solvable with time.
Increased investment and larger market capitalization will decrease its volatility. Scalability solutions already in the works will make the network be able to handle massive amounts of daily transactions. Scalability and more investment will push more retailers to accept it. New, secure, and easy-to-use user interfaces will solve for its safety and will make the on-ramp more accessible.
Bitcoin still has years to go to be a truly viable currency on a global scale, but It is exactly these current situations that make Bitcoin’s use case more relevant than ever. This use case is being truly financially autonomous and not having to rely on the banks.
Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) can be highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.
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