The world Bank has predicted a deterioration in the world's economic situation due to the coronavirus pandemic. Will this lead to an increase in demand for cryptocurrencies, as is happening in countries where the population is losing confidence in national currencies

About 60 million people around the world may be in extreme poverty due to the coronavirus pandemic, world Bank President David Malpas said. He stressed that COVID-19 could undo all the efforts to overcome poverty that have been made over the past three years. At the same time, increased demand for cryptocurrencies is observed in those countries that are experiencing a severe economic crisis, for example, in Venezuela or Argentina.

"According to our estimate, up to 60 million people will be driven into extreme poverty, which will offset the entire process in the fight against poverty over the past three years… Families have lost loved ones, millions of jobs and livelihoods have been lost, and health systems are under enormous strain around the world," said Malpas.

According to him, the world Bank has already provided assistance in the fight against the pandemic to 100 States, which account for 70% of the world's population. The Bank is committed to providing $160 billion in grants, loans and investments to developing countries within 15 months to combat the effects of the coronavirus pandemic.

The organization stressed that in order to overcome the consequences of the pandemic, countries should expand business assistance programs and switch to direct payments to the poor.

How cryptocurrencies react to the crisis

Despite the fact that countries are gradually lifting restrictions imposed due to the pandemic, the economic crisis is just beginning. Earlier, the Chairman of United Russia, Dmitry Medvedev, said that "there is no end in sight to the current crisis." At the same time, Elena Malinnikova, a freelance infectious disease specialist at the Ministry of health, predicted that the situation with the incidence of COVID-19 may improve by July this year.

Bitcoin is popular in developing countries with serious economic problems. For example, in Argentina and Venezuela, the cost of the first cryptocurrency has repeatedly risen above the average market value. In November last year, LocalBitcoins ' Argentine division recorded record trading volumes after the introduction of a $200 limit on buying dollars, whereas before it was $10,000.

A similar dynamic was demonstrated by the p2p platform in Venezuela, where the amount of transactions for the week exceeded 142.9 billion bolivars. Amid the hyperinflation of the Venezuelan Bolivar, local residents began to use cryptocurrencies as a means of preserving value.

"Cryptocurrency distribution depends on legislation and control of operations within the technology. As we can see from the decline in interest in bitcoin and a large number of refusals from major economies (for example, the sensational TON project), state systems are not ready to introduce cryptocurrencies," said Yevgeny Efanov, head of the Finance practice at the digital consulting company AIC.

In his opinion, the current situation with the virus will speed up the process of adaptation and obtaining various types of licenses, but will not solve the issue of widespread distribution. Economies in different countries need control over payments in all segments and technologies, and it is difficult to develop control systems and correct bills spontaneously.

"But I do not rule out local outbreaks in some States, which are much more flexible relative to the rest of the world," Efanov said.

Why cryptocurrency is unlikely to help in a crisis

Widespread distribution of cryptocurrencies and digital assets against the background of falling living standards and incomes is unlikely, said Viktor Pershikov, a leading analyst at 8848 Invest. He explained that if people do not have enough money, then there will be nothing to invest.

"Currently, cryptocurrencies act as a reliable investment tool for preserving value and play the role of a protective asset, which, like gold, makes sense to buy in order to ensure that investments do not depreciate due to inflationary and crisis moods. But if people do not have funds left, then there will be nothing to invest in protective assets, " Pershikov said.

He also noted the importance of legislative regulation of a new type of asset for its wider distribution. At the same time, transaction costs will be higher in those regions where legislative initiatives will create local crypto-processing, which will again negate the current advantage of digital assets over Fiat.

"At the current stage of development of the crypto industry, a sufficient level of well-being of citizens of different countries is necessary. If the standard of living and income fall, cryptocurrencies will not be a solution to the ongoing crisis processes, " the expert said.

Can problems in the economy help the spread of cryptocurrencies

Nikolay Klenov, a financial analyst at Raison Asset Management, has the opposite opinion. According to him, any financial crisis will contribute to the growth of demand for assets that are not subject to artificial emission.

"In current economic models, turning on the printing press is a common practice. In times of global crises, the most difficult situation is for undeveloped and developing countries, many of which are experiencing shortages of essential goods and other social problems. In such countries, inflation reaches two-digit, and sometimes three-digit numbers, as in Venezuela or Argentina, " Klenov explained.

He concluded that it is impossible to save your savings in such conditions, this causes an increased demand for other, harder currencies and cryptocurrencies in particular. At the same time, in mid-may, the head of the IMF, Kistalina Georgieva, said that the organization's forecast for GDP in 2020 has become even worse than pessimistic expectations.

The Asian development Bank (ADB) estimates that the world economy will lose up to $9 trillion in 2020. Now economists believe that the scale of the future crisis will many times exceed the recession of 2008-2009.

Since the beginning of this year, bitcoin has risen by a third, to $9764. Now experts ' opinions about the future of cryptocurrency are divided. Some believe that global shocks will benefit a new type of asset. Others are confident that digital money will suffer no less than other sectors.