Even if you have tried to avoid it, you can’t have missed Bitcoin’s astonishing price hikes throughout the COVID-19 pandemic.
One of the most interesting things about Bitcoin (BTC) is that it sometimes behaves like gold and other precious metals in terms of acting as a safe haven asset and correlating its trend against theirs.
But it has another side that is like traditional stocks and securities. One way to determine what the leader of the crypto niche might do in the future is to study its past.
There are no guarantees, but it can’t hurt to simply study the data and see what the premier crypto coin did from early 2020 until today.
Was BTC always viewed as a safe haven by investors since the virus hit? Did Bitcoin trading take off once everyone realised that COVID was going to be around for a while?
Finally, how can we explain, with 2020 in hindsight, what caused all the ups, downs, and price stalls in the world’s most popular form of virtual money? Here are some facts that might help bring a little clarity to the situation.
Pandemic and BTC Price
What has happened to the price of Bitcoin since the COVID-19 virus made its way from Wuhan, China, and travelled around the world?
At first, the price went down through May but quickly regained its footing, stabilised for about five months near the $10,000 one, and soared upward after mid-October.
To answer the simple question of how did BTC do during the pandemic is fair to say it did very well. Not only well, but better than stocks and even better than gold.
Cryptocurrencies vs Other Markets During COVID
The cryptocurrency markets outperformed most stocks during 2020, generally speaking. This anomaly is explained primarily by the year-end surge of crypto, while many of the main blue-chip shares were still struggling.
It’s fair to say that during the bulk of the COVID-19 crisis, the virtual currencies did better because people see them as an alternative way to shelter wealth, particularly in bad or uncertain times. In recent history, there have been no more uncertain months than those that began in March of 2020.
Fundamentals for BTC’s Rises and Falls in 2020
Before the virus, the coin was sitting at about the $9,000 mark but started a short free fall in March, losing about one-quarter of its value.
It’s possible that major investors were trying to decide what to do with their holdings and that individuals panicked and pulled out of the entire cryptocurrencies trading market.
Regardless, the dip was short-lived, and BTC’s prices began to rally between June and August when it exceeded its pre-pandemic price.
Once the August value for Bitcoin reached $11,000, there was some consolidation and sideways trading for another couple of months before a real run-up began.
Starting in mid-October, as the pandemic lockdowns, curfews, and business repercussions were getting serious, major institutions started buying more of the coin. Prices reached $40,000 in January 2021, retraced to the $35,000 zone, and then shot back up near the $50,000 line.
There are three fundamentals behind the year-long upward moves.
First, several large companies, including PayPal, announced that they would begin using the crypto as a means of acceptable exchange.
Second, many individual investors are suffering from a bad case of FOMO, or fear of missing out.
Third, like gold, cryptocurrencies, and this one in particular, enjoy a reputation as a hedge against inflation.
Whether it’s deserved or not, people spend real money getting into the virtual coin market when they fear that times ahead are going to be difficult.
Now that there has been at least some letup on governmental restrictions and talk of COVID beginning to infect fewer people, the possibility for inflation is real.
Coupled with a new U.S. administration that has already proposed a multi-trillion-dollar recovery package, the pandemic recovery period could see more upward pressure on the price of all virtual coins, not just the sector’s leader.
2021 Bitcoin Price Predictions
The prediction game is interesting to watch. Some of those who play it are major investing institutions that have a state in what the fate of BTC might be.
So, when they make guesses, it’s hard to assume they’re being particularly sincere. Others use objective analysis to make their best bets about where the coin is headed in 2021.
For instance, like many large institutions, Citibank’s experts are on the record as saying that Bitcoin could hit the $300,000 mark within the calendar year.
Others, including investing gurus and smaller fintech firms, are in the same camp. Why do they assume the virtual coin will do so well?
In addition to having a finite supply, unlike fiat/government money but similar to gold, Bitcoin is viewed as a safe-haven by many investors.
In fact, the coin itself was born in the depths of the 2008 global economic downturn as an alternative to unstable national currencies.
Watch how Bitcoin performs in 2021 and whether the analysts were right!c