Events of 2020 That Influenced the Crypto Market

2020 was rich in events that, among other things, had a huge impact on the crypto market. Bitnewstoday lists the main ones.

COVID crisis

"Black Swan", which no one expected. At the start of the COVID-19 pandemic, Bitcoin, along with the rest of the crypto market, fell following the stock markets. In March, against the backdrop of a 20-30% decline in stock prices, bitcoin dropped 50% over the day to a local minimum of $3800. At the same time, gold has renewed its 11-year high. Experts note that in the first half of 2020, there was a high correlation between bitcoin and the S & P500, however, in the second half of the year, the cryptocurrency showed the properties of a risky asset.

Daniil Rostovtsev, founder of Only High Technologies, noted:

“This year, the bitcoin rate began to have a similar dynamics to the price of gold, which increased amid geopolitical instability. The price also grew amid the aggravation of the conflict between the United States and Iran, which led to an increase in the value of various assets. The cost of oil has risen due to the possibility of causing damage to the United States on the oil facilities of Iran, but at the same time, the price of bitcoin has increased sharply – by 20% in five days! On January 8, it reached $ 8100. At the same time, by January 10, the exchange rate fell to $ 7,800 amid the release of Donald Trump's declaration that the United States will not start a war with Iran."

The growth of bitcoin in the second half of the year is due to the uncertainty that has developed against the background, firstly, of the corona crisis, secondly, the trade wars between the United States and China, and thirdly, the presidential elections in the United States.

“Investors, including institutions, saw it as another alternative asset that can be used to hedge risks and include in their portfolios for diversification. It was the influx of institutions triggered by the pandemic that gave a powerful impetus to the crypto market and pushed the bitcoin price to new all-time highs at the end of 2020. The volume of institutional funds injected is colossal. These are billions of dollars. I believe that the entire year of 2021 on the crypto market will be held under the banner of institutional investors, "

– noted Tatiana Maksimenko, the official representative of the Garantex crypto exchange.

The third halving in the bitcoin network

Halving was an expected event that happens every 4 years (every 210 thousand blocks). Crypto market participants believed that halving would stimulate the growth of bitcoin's value due to the fact that the reward to miners for the mined block is halved, which reduces their revenue.

Market participants also assumed that miners, in order to compensate for the lost profit from mining blocks, would hold on to the mined coins, not deliver them to the market in the hope of an increase in the price. On the expectations of such behavior of miners, Bitcoin began to grow a few months before the event itself. There was even an opinion that the halving effect is already taken into account in the price of bitcoin. However, experts note that halving has a longer-term effect, which will fully manifest itself 12-18 months after the reduction of rewards namely by the autumn of 2021.

Boom in DeFi

Experts point to an explosive interest in decentralized finance amid a new approach to lending and asset tokenization.

"Demand for DeFi and dApps is growing, which means that 2021 could be the year of cryptography, and it could be the toughest of the competition. So far 2017 has been the most favorable year for crypto ever since it launched thousands of new currencies around the world, resulting in a 4,000% increase in total market capitalization!",

– noted Dmitry Isakov, general director of investment companies "Megatrends".

Launch of update Ethereum 2.0 Phase 0.

Some analysts believe that if Ethereum developers manage to keep an approximate schedule for deploying updates, then in 2021 ETH has every chance to update its all-time high and exceed $1500.

PayPal recognized cryptocurrency as a monetary asset and gave access to trade

Experts believe that this could push Visa and MasterCard to reconsider their attitude towards cryptocurrency. Experts also hope that Bitcoin can become a means of payment amid the emergence of the possibility in the near future to pay with cryptocurrency for services in e-commerce (these are 26 mln accounts). This will represent a huge step in bringing the traditional and digital financial worlds closer together.

In general, 2020 was quite favorable for the crypto market, while the traditional economy suffered a severe blow due to the consequences of the COVID-19 pandemic. For the next year, cryptanalysts make completely different forecasts of the bitcoin rate – from $10 thousand to $318 thousand, but they all agree that the cost of the cryptocurrency will grow.