In 2020, there were several events that shook the world economy. At first, cryptocurrencies showed the property of risky assets, showing a high correlation with the American stock market. Then they began to demonstrate a similar dynamic with gold, which grew in price against the background of geopolitical instability.
- U.S.-Iran conflict
On January 3, the United States struck Baghdad, killing the head of Iran's elite unit, Kasem Suleimani, considered one of the most powerful figures in the Middle East in recent years. In Iran, these actions were called terrorism and responded five days later by firing missiles at bases in Iraq where the U.S. military was located.
At this time, the topic of the possible beginning of a new World War began to be raised in the network. The escalation of the conflict has led to an increase in the value of various assets. Oil prices rose due to the likelihood of U.S. strikes on Iran's oil facilities, and the value of gold rose due to geopolitical risks. At the same time, the price of bitcoin increased sharply - by 20% in five days, on January 8 it reached $8100. At the same time, by January 10, the rate fell to $7800 against the background of a speech by Donald Trump, in which he did not declare war on Iran.
- Coronavirus
On 22 January, the Chinese city of Wuhan was quarantined due to a new type of pneumonia outbreak caused by covid-19 coronavirus. At first, the first cryptocurrency manifested itself as a protective asset and grew in price in February, updating the highs of 2020 above $10,300, but immediately after that the rate began to decline in the wake of the U.S. stock market.
In mid-March, the rate of the first cryptocurrency for the day fell by 50%, to a local minimum of $3800. At the same time, stock prices fell by 20-30%, and gold updated the 11-year high value. The correlation between bitcoin and the S'P 500 was extremely high in the first half of 2020, the cryptocurrency showed the properties of a risky asset.
However, immediately after the minimum update, the BTC rate began to recover quickly. At the beginning of April it already exceeded $7000, in the first days of May it rose to $10,000, and in mid-August set an annual maximum of $12,400. Such a rapid price increase could be influenced by the following external factor.
- U.S. Monetary Policy
In March, U.S. President Donald Trump signed a $2 trillion law to stimulate the country's economy. On October 1, the U.S. House of Representatives passed a new version of the $2.2 trillion economic stimulus bill. This is the largest government aid package in American history. The new liquidity influenced the recovery of the stock market, its part could move into cryptocurrencies, positively affecting the price of the main digital coin.
The second and more visible impact of such policies is the depreciation of the dollar due to the increase in its emission. Against this background, bitcoin, which has a limited number of 21 million coins, looks more attractive. Therefore, in 2020 several public companies have invested in the first cryptocurrency. For example, MicroStrategy has invested $425 million in BTC since the end of the summer, which has now grown to almost $433 million.
The cryptocurrency was also bought by payment company Square, owned by Twitter creator Jack Dorsey. The $ 50 million invested in early October in BTC has already turned into $ 53.3 million. The asset manager of Stone Ridge Holdings Group also invested in bitcoins, she bought 10,000 BTC, which at the current rate exceeds $ 110 million. Its representatives explained that the decision on The investment was made to hedge the macroeconomic risks associated with the monetary policy of the central banks of various countries.
“Now uncontrolled printing of unsecured money is underway, and the yield on bonds goes into the negative zone. The purchase of over 10,000 BTC is a core component of our Treasury strategy, 'Stone Ridge noted, The Block writes.
Since the beginning of the year, the cost of bitcoin has grown by 57%, to the current level of $ 11,344. At the same time, the total capitalization of the cryptocurrency market, excluding BTC, increased by 146%, to $ 150 billion.
