How Bitcoin Price Changed During the Pandemic

In 2020, while the pandemic was wreaking havoc on economic systems around the world, the crypto market experienced a boom. Bitcoin surged in spite of the things that would normally make investors risk-averse. Here’s a look at its dynamics during the first year of the pandemic.

Incredible Surge

In mid-March, when the pandemic was declared, Bitcoin was at its year-low (US$4,748). By the end of 2020, it had risen to almost US$30,000. This spectacular growth was making headlines daily and pushing the prices of altcoins up. So, what drove this impressive appreciation? Is it any different from the bubble of 2017, when the price grew 20-fold to under $20,000 and subsequently fell back to $3,000?

  1. Investors from Large-Scale Institutions

Investors engaged in pension schemes, investment trusts and university endowment programs flocked to the crypto market, which didn’t happen in 2017. Back then, the space was dominated by individuals — retail investors who were mostly attracted by the scarcity of the coin and its status as the antithesis to the global financial system. They were buying Bitcoin out of their “fear of missing out” (FOMO).

In 2020, high-profile investors like billionaire Paul Tudor Jones and insurance giant MassMutual invested in Bitcoin heavily. Even JP Morgan changed its attitude to the coin. The growing trust in the digital currency allowed it to enter the mainstream.

PayPal now lets users buy, sell and hold Bitcoin via their accounts. More and more vendors are accepting Bitcoin. Visa has even introduced special credit and debit cards in cooperation with Coinbase. 

With new uses of crypto appearing, it is becoming more popular. Bitcoin is no longer viewed as a payment tool for the dark web. Digital wallets and exchanges are easy to access, and there’s more information about them than before.

  1. Growing Inflation 

Due to the pandemic, governments launched massive stimulus packages. The influx of money drove up inflation, which led to a decrease in consumer purchasing power. In these circumstances, Bitcoin became an attractive store of value. Its supply is limited, and it is also slowing down due to the specifics of mining rewards. As a scarce resource, Bitcoin is compared to precious metals.

To Sum Up

During the pandemic, the price of Bitcoin surged thanks to the increased attention from high-profile investors, growing institutional adoption, and rising inflation. It became an attractive store of value while conventional systems were losing trust.

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