The year 2020 will go down in history as one of the memorable year for bitcoin and the crypto market at large. There’s no doubt about that. No one would have expected that the Bitcoin and cryptocurrency market would have defied all odds in a year marred by global economic recession, financial crises and an outbreak of a pandemic.
Around February to March 2020, the whole world was hit with the outbreak of a deadly virus – COVID-19 – which has resulted in the death of millions of people all over the world. The effect of the virus outbreak, which led to a total lockdown in major cities, affected economic activities all over the world. Due to the uncertainty casted on global growth, the financial markets including the cryptocurrency market was hit with a deep plunge. We take a brief look at some of the major events that have shaped the current Bitcoin’s bull run in 2020.
COVID-19 outbreak saw the world embrace contactless payment.
Bitcoin, for instance, suffered a price crash so low, to trading around $3000 in March 2020, thereby, losing about 55% of its value. Other cryptocurrencies in the market, equally experienced price dips. Ethereum was down by 40%, Litecoin dropped by 35%, and XRP also plummeted by 25%.
With a protracted downturn of the global economy, nobody would have predicted a major bull run that saw unprecedented interests and new players entering into the cryptocurrency market. However, the pandemic came as a blessing in disguise for crypto, as contactless payment became the new normal. As such, the Bitcoin price falls were short-term.
Bitcoin’s third successful halving sparks optimism
Bitcoin’s halving in May 2020 was the first catalyst that triggered optimism amongst bitcoiners and crypto traders, as a daily reward of new bitcoins to miners was halved from 12.50 to 6.25. Bitcoin’s price was trading around $8250. At that time, Bitcoin P2P trading boomed in Africa. Trading volumes hit new highs in countries like Nigeria and Ghana.
Mainstream companies embrace Bitcoin as a better store of value.
Institutional buying of Bitcoin came sooner than expected. With the rapid downfall of fiat currencies all over the world, mainstream companies and organisations saw Bitcoin as a better store of value. Nasdaq-listed US firm, MicroStrategy, was one the first to add bitcoin to its treasury reserve. Shortly after, Square Inc, the company behind CashApp, whose CEO is Jack Dorsey (Twitter’s CEO), announced their purchase of Bitcoin, using 1% of the company’s total assets. In October 2020, Stone Ridge Asset management, announced that the company acquired 10,000 bitcoins worth over $100 million as a primary treasury reserve asset.
PayPal’ crypto offering
Fintech giant, PayPal announced its entry into the cryptocurrency market, after it offered cryptocurrencies such as Bitcoin, Litecoin, Ethereum to its over 300 million active users. The news alone, pushed Bitcoin’s price to trade around $12,000. Not long after it was reported that PayPal and CashApp were buying over 100% of the newly minted bitcoins.
Debasing Fiat currencies in developing countries
In Africa, the cryptocurrency market continues to witness an influx of new users into the market. Economic instability and frequent devaluation of many African currencies, worsened due to the outbreak of coronavirus in the continent. Cryptocurrency was seen as a better store of value, as Decentralize Africa reported survey shows that many Africans prefer to save in crypto, while they spend with fiat.
Also, Bitcoin became a tool of activism in Nigeria. Donations made during the EndSars Protest (a cry to end Police brutality in the country) were reportedly frozen by Banks, on the order of the Central Bank of Nigeria. Donations were switched to Bitcoin. That move further accelerated the adoption of Bitcoin to new users.
What more… The chart above says it all.