As we see the light at the end of the COVID-19 pandemic tunnel, many of us are pondering a post-pandemic world. We have much to look forward to, such as socializing and traveling especially. But there’s also a ton of unknown territory. Among those unknowns: How will the economy fare once the worst is behind us? And if you’re a crypto-enthusiast, what does this mean for cryptocurrency?
The world has experienced pandemics before, but cryptocurrency hasn’t. To shed some light on our hopefully not-too-distant future, let’s take a look at the last comparable pandemic, its effect on the economy, and what that might mean for crypto.
The Toll of Two Pandemics
The Great Influenza Pandemic lasted from 1918-1920, spread in three waves, and claimed 675,000 U.S. lives and 50 million worldwide. The H1N1 influenza was sometimes called the Spanish flu but not because it originated in Spain or the country was especially affected by the outbreak but because Spain first reported the virus.
The COVID-19 pandemic was first detected in December 2019. We’ve experienced three waves since then, and as we all know, it’s still present today in 2021. It has killed 550,000 Americans and 2.79 million individuals worldwide.
The advice to slow the spread of the 1918 pandemic was essentially the same as the advice we’ve received today: practice good hygiene, use disinfectant, isolate, and limit gatherings.
The basic rule of thumb: Stay in to slow the spread of the disease, which limits the spending that fuels an economy.
Pandemic Economies
Today, the travel, entertainment, and service industries are all experiencing major pandemic-driven slumps. In December 2019, U.S. unemployment was 3.5% and peaked at 14.8% in April 2020.
The 1918 pandemic also hit the service and entertainment industries hard, which suffered double-digit losses in revenue. Unemployment went from 1.4% in 1918 up to 11.7% by 1920.
Certainly, both pandemic economies experienced comparable fallouts.
The Effect of Pandemics on Gold and Bitcoin
Despite an economic slump, the price of gold increased by 6.1% from 1918 to 1919. And while the price of gold has dipped just recently, its overall arc over the course of the Covid-19 pandemic has been exceedingly strong with a price increase of 23.8% in January 2021.
This isn’t surprising, as gold often performs well during times of crisis because of its status as a flight to safety. What’s interesting to hodlers is that Bitcoin’s highs and lows are mimicking gold’s more and more, meaning Bitcoin is being viewed as a safe haven too.
However, even more impressive than gold’s price increase is Bitcoin’s meteoric rise over the past year. Since the official start of the pandemic on March 11th, 2020 , the price of Bitcoin has increased by over 1000%.
A Post-Pandemic Economy
Here’s more good news to cheer you: The entertainment industry boomed in the 1920s once the pandemic was over, and the U.S. entered a time of prosperity. (No wonder the 20s roared–everyone was tired of social distancing and ready to party.)
So if our current pandemic continues to follow the arc of its antecedent, then anticipate brighter, livelier, more prosperous times ahead with more opportunities to spend your currency, crypto or otherwise.
