The President of the country told when the second coronavirus outbreak may occur in Russia. Other countries are also at risk. What will happen to the world economy in this case and how will this affect the stock and cryptocurrency markets
The coronavirus infection has had a significant impact on the stock and cryptocurrency markets, in particular on the Russian economy. And the situation may get worse. In Russia, from October to November, a second wave of Covid-19 diseases is possible, President Vladimir Putin said during a meeting on the sanitary and epidemiological situation. The head of state called on the Ministry of health to be prepared for such a development and said that it is necessary to start preparing for the restoration of medical institutions after the end of the pandemic.
"Gradually getting out of the restrictions that we still live in today, we need to think about what the experts here and their colleagues abroad are talking about, that there may be another wave, which is possible somewhere in the autumn, the end of October-November. We must also keep this in mind and be prepared for this development, " Putin said.
A new round of coronavirus infections is also possible in other countries. For example, Yesterday, may 21, Japanese economic recovery Minister Yasutoshi Nishimura warned that a second wave in the country is inevitable. For this reason, the authorities intend to do everything necessary to reduce the scale and consequences of this, TASS reports
"The second wave will definitely happen. But it is important to make sure that the size of this wave is small, " Nishimura said.
Robert Redfield, Director of the Centers for disease control and prevention (CDC), has previously issued similar warnings about the United States. According to him, most likely, the second wave will come in the winter, during a seasonal flu outbreak. In this case, the consequences may be stronger than in the first case, since this will lead to an "unimaginable burden" on the health system.
At the moment, 326 thousand cases of Covid-19 infection have been detected in the Russian Federation, and 8894 cases have been detected in the last day. Almost 100,000 people recovered, and 3,249 died.
What will happen to cryptocurrency in the case of the second wave of Covid-19
The coronavirus pandemic has hit the economy and, as a result, the stock market. The value of the S&P 500 index, which includes 505 of the largest companies whose shares are traded on US exchanges, fell to a record low of 2,237 points. However, as countries began to lift restrictions, this figure recovered to the current level of 2,941 points.
This drop was also reflected in the cryptocurrency market. On March 13, the bitcoin exchange rate fell to $3800, dropping by more than 50% in a day. To date, the price of the coin has recovered to $9100, twice rising above $10,000 during this period.
The price of the main digital coin could continue to grow due to halving, the effect of which is expected closer to autumn, a senior analyst admitted Bestchange.ru Nikita Zuborev. But he noted that the rise in price of the cryptocurrency, if it happens, will probably be offset by the impending liquidity crisis in all markets.
"According to our ideas, it is quite possible that there will be a second wave of the crisis, which will primarily affect the purchasing power in the consumer market. This will pull all other areas of business with it. It is closer to autumn that we expect these consequences to occur. Investments at this time may be significantly reduced for individuals, and some of the funds of large investors will be taken over by the cheaper securities market. There is serious uncertainty in the market. If there is a second wave of the epidemic in a number of economically large countries, the severity of this crisis and its consequences will increase proportionally," Zuborev suggested.
He added that despite the possible strengthening of the crisis, the most serious risk for the crypto market is possible manipulation by major players. Moreover, this week, the coins that were mined at the time of the appearance of bitcoin, when it was known only to a narrow circle of people — like-minded "Satoshi", started to move. In view of this, there is a possibility of selling large volumes of coins, which has already significantly affected the market mood and the price of BTC in the past few days.
Sergey Mendeleev, the founder of the Garantex exchange, also voiced a pessimistic forecast of digital currency quotes in the event of a repeat of the crisis. According to him, in the event of a renewed fall in the stock market, the exchange rate of bitcoin and other coins will begin to decline, as it already happened in March.
"We must always remember that more people died from the second wave of the Spanish Wave than from the first. If the reaction to the second wave is similar, it will shake the economy very much. The business has no stocks, all the pillows are eaten. The crypto market in the Russian Federation is already bad from state initiatives, but if we talk about the cost of crypto assets, it will most likely correlate with the global situation. The second wave will begin — we will see oil below $10, The Dow Jones index below 10 thousand. Plans for multiple growth will have to be postponed until better times, " Mendeleev predicted.
Russia and the United States
If the fears of the Russian President are confirmed, the second wave can affect the Russian stock market and weaken the ruble exchange rate, according to Alexey Kiriyenko, managing partner of EXANTE. However, even the weakening of the national currency is unlikely to stimulate the growth of Russian interest in cryptocurrencies. While bitcoin is of interest to an extremely narrow stratum of Russians. One of the reasons is the low level of trust due to significant volatility and negative attitude on the part of lawmakers.
However, much more serious consequences are possible in the case of a new wave of infections in the United States, Kiriyenko said. In his opinion, governments are unlikely to rush to impose restrictions in order not to block the economy again. This can lead to even greater losses and cause a new downturn in the economy.
"The new closure of the US due to coronavirus can create a second wave of falling stock markets. It is worth noting that the US financial system at that time may be in quite difficult circumstances — with a huge level of public debt, an abundance of defaults and the highest level of unemployment…Donald trump is already saying that he will not close the country. However, this risks causing even greater losses among people and in the economy. As we have already seen in March, the fall of markets takes on the scale of margin calls, when everything falls, including gold, the stock market, currencies of developing countries and cryptocurrencies, " Kiriyenko said.
He added that if such a situation is repeated, bitcoin, as earlier this year, is unlikely to be able to stay away. In addition, many people are now" walking " cryptocurrencies. But their attitude to these investments may change dramatically in the face of extremely high unemployment and falling income levels. Crypto assets may be the first to "exit" to maintain the standard of living of current investors, the expert warned.
World economy
Vitaly Mankevich, President of the Russian-Asian Union of Industrialists and entrepreneurs (RASP), believes that the second wave of the coronavirus could lead the world economy into a deep crisis. This scenario happened during the previous world pandemic — the "Spaniards". But when the disease is defeated, recovery can begin at a record pace.
"If the first wave is a microinfarction for the world economy, the second wave can lead to a full-fledged paralysis of the economy. This will be the new General 90's with the loss of up to half of jobs and the transition to a subsidiary economy. We saw something similar a hundred years ago, when the Spanish Flu pandemic was raging in the world. Then, as now, the economy fell into a deep crisis, but after a prolonged stagnation, the market began to recover at a record pace, which led to the" roaring 20s" and the peak of consumer demand and the acceleration of scientific and technological progress.",-shared Mankevich.
He suggested that if the pandemic finally goes down, then by the end of the year, world GDP may decline by 2-3%, and the total losses may reach $6-9 trillion. This is painful, but not critical, Mankiewicz believes. But the second wave can double or even triple these losses. In this case, we can expect the announcement of defaults in Ukraine, Argentina, Pakistan and a number of African countries. The second wave may also lead to the default of outwardly prosperous countries, such as Brazil or Turkey.
"The tourism and transport industries will be completely destroyed, and the service market (cinemas, children's amusement parks, fitness halls will disappear) will significantly decrease. If we say that it will take up to 2 years to restore the economy after the pandemic, then the second wave will increase this period to 5-7 years. Russian GDP will be able to decrease by 20-30%. The price of Brent oil will be 5-10 dollars per barrel, and the unemployment rate will rise to 50%. At the same time, if the first wave of Covid-19 forced citizens to spend savings, the second will massively drive the population into debt and loans," the expert is sure.
From his point of view, with such a development of events, the sources for financing budget deficits will become less and less. In view of this, all countries will start rampant currency issuance, which will lead to an increase in inflation and may threaten the status of the dollar as the world's reserve currency. In Russia, the inflation rate can reach up to 40% per year, Mankevich allowed.
He noted that the second wave can only benefit large companies that will finally become monopolists on the Russian market. In this case, the share of SMEs in GDP will be reduced from 21% to 3-5%. There is also a possibility of a new wave of privatization, and if in the 90s assets were sold to the West, now China and India can become the main investors in Russian assets, the President of the RASP concluded.
Second wave Covid-19-global risk
All experts agreed that the second wave of coronavirus in Russia and the world can lead to strong negative consequences for the stock market and the economy as a whole. Bankruptcy of companies, mass unemployment, high inflation, and even defaults of individual countries.
If the situation with a pandemic develops in this scenario, the cryptocurrency market will not remain on the sidelines. At best, investors will sell cryptocurrencies following a new drop in the stock market. At worst, you will have to get rid of digital assets in order to have money to meet basic needs: food and paying bills.