Bitcoin in 2020.
Expectations regarding the rate of the first cryptocurrency were the most contradictory. Many people were inclined to believe that in 2020, bitcoin could reach the bottom when it becomes unprofitable to mine — especially given the halving, which was supposed to take place in may. As always, there were those who predicted bitcoin to reach unprecedented heights. Oddly enough, both were right: at the end of the first quarter of 2020, bitcoin sank along with the rest of the markets that were shaken by the storm of the covid pandemic. Halving bitcoin endured steadfastly and did not fall to the unprofitability of production, but, on the contrary, began to restore the rate. At the end of the third quarter, after reaching a local minimum, BTC started to grow, and is still growing, rapidly approaching its historical maximum, which was recorded in December 2017.
The growth of the first cryptocurrency was not accidental: against the background of the uncertainty that the markets showed at this time, bitcoin was considered by many as a hedging tool: many purchased the cryptocurrency to diversify their portfolio, since such a seemingly unshakable asset as the dollar began to lose value after the distribution of billions of helicopter money, printed essentially out of thin air. Interestingly, the beginning of the year for BTC also turned out to be successful, and for the first time in 8 years: in January 2020, bitcoin rose by 20% — the last time before this, such an increase was recorded in 2012. Then came March, when markets reacted to the pandemic and collapsed in a flash — energy, stock, and cryptocurrency after them. Until September, the BTC rate fluctuated, growing and correcting again, after which the asset value sharply increased.
In many ways, the growth of the first cryptocurrency of the last two months is associated with the influx of new users to the crypto market. Newcomers poured in from among those people who at the time of the pandemic were cut, dismissed, sent to rest at their own expense. Many stayed home to work without spending more time commuting to and from work. All these people had free time, and most of them were looking for new ways to earn money. Bitcoin, as an asset that is not subject to inflation — its emission is strictly limited-attracted the attention of those who were in search, as many of them tried to master trading as an alternative source of potentially high income. There is another reason that contributed to the growth of the first cryptocurrency: interest from venture funds. This same interest is the second important crypto trend of the outgoing year.
Popularity of cryptocurrencies and Bitcoin in 2020
The pandemic returned the attention of institutional investors to cryptocurrencies, which somewhat faded in 2019 — then there was a significant decrease in the transfer of venture capital companies ‘ assets to bitcoin. In the same year, interest returned, and with a vengeance. Three giants of the venture capital market invested in bitcoin at once, and each of them accompanied their actions with comments in the spirit of the fact that bitcoin today is a more promising and reliable asset than the dollar. And when venture funds appear on the scene, this is a serious support for the crypto market in the eyes of business. In General, oddly enough, against the background of the General failure, venture capital not only did not stop investing, but increased its investments, and this year it was mainly interested in technological projects, along with medicine and health, as well as the field of transportation.
During 2020, the money management company Grayscale invested in BTC by as much as 80% more than in all previous time: after the halving event, which took place in may, Grayscale bought bitcoins by 50% more than during this time the miners managed to get them. By September, the Grayscale cryptocurrency trust reported that it had a total of 450,000 BTC in its accounts. This is almost 2.5% of all currently issued coins on the network.
At the beginning of the third quarter of 2020, the giant MicroStrategy acquired BTC for about $250 million, announcing that this will launch a new MicroStrategy strategy for capital placement. Transferring part of the assets to bitcoin is designed to maximize the value of the company’s investors ‘ investments in the long term, in contrast to the US dollar, which is subject to inflation and, consequently, devaluation.
In October, news came that the venture capital company Square also transferred some of its assets to bitcoin. In total, 1% of Square’s total capital was transferred to the first cryptocurrency, namely about $50 million. It is interesting that this step was made not at the moment of drawdown, which was observed in September, but when bitcoin has already started to grow. The company also made an official statement that against the background of macroeconomic problems and the decline in the exchange rates of the largest state currencies, the cryptocurrency area, unlike the latter, is evolving. Therefore, part of the dollar balance was decided to transfer to bitcoin.