2020 Recap: What Happened To Bitcoin And What 2021 Awaits?

The text below is an advertorial article that was not written by Our journalists.

2020 Recap: What Happened To Bitcoin And What 2021 Awaits?

We are about to say goodbye to 2020, a year of joy, excitement, sadness, bewilderment, and change. We witnessed more historic events than we did in total in the past few years. This could also be applied to Bitcoin, for Bitcoin has visited a low of $3K as well as a high of $19K. As 2020 about to come to an end, let’s take a review of what happened to Bitcoin in 2020, and what awaits it in 2021.

March Flash Crash

Turmoil rocked the financial markets across the world as fear of a pandemic-induced economic recession grew. Bitcoin fell below $4,000 on March 12th, recording a biggest one-day loss of 27% in nearly seven years.

When talking about the steep plunge of Bitcoin and other cryptocurrencies, Mati Greenspan, founder of Quantum Economics, commented that “The volatility is largely due to the fact that it’s quite new and adoption rates are unstable, which leads to large levels of speculation. For me, a measure of success would be to see Bitcoin remain on a slow but steady incline, rather than zooming toward the moon due to global uncertainty.”

Bitcoin managed to rebound to $7,000 in April, a month before its third historic event – halving.

Bitcoin’s Third Halving Event

Bitcoin welcomed its third halving on May 12th. Several weeks before the event, speculations for the third half were flying around the market, but most investors and analysts were tentative to make a move.

Bitcoin halving will cut down the reward for mining Bitcoin in half until the last Bitcoin is mined. The total maximum supply of Bitcoin is 21 million, and the halving takes place every four years, so no Bitcoin will enter circulation by 2140.

The capped supply of Bitcoin distinguishes it from such other traditional assets as gold and money, which more or less suffer from inflation. This is also the reason why Bitcoin shows a negative correlation with the dollars. Investors tend to exchange their assets into Bitcoin when there are signs of inflation. “If tomorrow, if all the gold mines in the world said we’re going to cut supply by 50%, I can assure you gold will be at $10,000,” said Frank Holmes, CEO of U.S. Global Advisors, in an interview with Kitco News.

Bitcoin traded at the tight range of $9,000 to $10,000 a few months after the halving event. In the previous two halvings, Bitcoin’s price all skyrocketed about one year later. If history does repeat itself, we shall expect a rally in the second half of 2021.

Bitcoin Took Off

After three months’ consolidation, Bitcoin made a breakthrough above $10,000 in October. Then suddenly, when investors were still talking about the possibility of Bitcoin correcting lower, it overcame hurdles of $12K, $14K, $16K and finally $19K, all within two months. Scared of missing the ticket to ATH, the market, institutional investors and retail investors alike, entered the FOMO mode and even pushed Bitcoin’s price to $19,857.03, topping its highest intraday record set in December 2017.

Unlike the 2017 short-lived bubble which was driven by retail investors, Bitcoin’s recent gain is clearly supported by institutional investors and even government sectors. What initiated the adoption was JPMorgan Chase. JPMorgan Chase has shown interest in Bitcoin since October, calling a “doubling or tripling” in price, should the uptrend sustain. It was reported that JPMorgan Chase has started providing banking services to Coinbase and Gemini exchanges. Before the support, its CEO Jamie Dimon had called Bitcoin a “scam” for several years.

Institutional giants such as Square Inc, Paypal and Grayscale have also sent positive signals for adopting bitcoin, which in turn boost investors’ confidence that bitcoin could act as a diversifier in times of uncertainty. Whales have flocked to the party – addresses holding at least 1,000 BTC rose to four-year highs at the end of October. Much of the newly-mined Bitcoin is held by whales, making the supply of Bitcoin getting more scarce. Moreover, retail investors have been moving their Bitcoin from exchanges to their own wallets, sending a hodl signal to the market. The fall in liquidity, coming inflation and global uncertainties are some of the factors that could boost Bitcoin higher in 2021.

Where will Bitcoin be in 2021?

Some wild guesses are that Bitcoin could break $100,000 or $318,000 by the end of 2021.

It’s quite rare to see a majority of analysts sharing bullish sentiments and making wild predictions that seem too good to be true. The $100,000 target is proposed by the PlanB, the creator of Stock-to-Flow. PlanB’s prediction is based on the decreasing supply and growing demand for Bitcoin. In view of its performance after the previous halvings, Bitcoin has the potential to reach from $100,000 to $288,000 by December 2021.

The $318,000 mark is called by Citibank analyst Tom Fitzpatrick. The senior also based his theory on the past performance of Bitcoin, saying that Bitcoin could repeat its price action from 2010 to 2011, thus taking Bitcoin to $318,000.

Only time will tell us whether Bitcoin will make history again. Nevertheless, it’s always better to prepare and buckle up your seatbelt for a crazy ride.

Bexplus is a Bitcoin-based trading platform offering 100x leverage and contracts for BTC, ETH, EOS, LTS, and XRP. Registration requires no KYC and takes 60-seconds. A Bexplus account grants you access to trading simulators, built-in charting software, up to 30% annualized interest bitcoin wallet, and a 100% deposit bonus.

Leave a Reply

Your email address will not be published.