In the brief but exciting history of cryptocurrency, it’s difficult to identify years that have been definitively good or bad for Bitcoin. Even in 2017, when Bitcoin reached its all-time high just shy of $20,000, a significant crash quickly ensued. The cryptocurrency is simply so volatile that most years tend to bring highs and lows in equal measure — which in turn leads to varied sentiments among investors and analysts.
We could end up saying the same thing of 2020, with several months yet to go in the year. As of late summer though, there are reasons to say that this has been a strong year for Bitcoin.
Bitcoin Weathered the Crisis
Most important of all is that Bitcoin weathered the financial crisis and emerged looking stronger than most major assets in the world. When we posed the question of whether or not Bitcoin was a safe investment in this time of crisis, it was still a little bit unclear how long the coronavirus outbreak would affect the world and what the economic fallout would be. At the time, Bitcoin had struggled just like most assets and markets. But its recovery was swift, and we can now say in retrospect that it displayed exactly the sort of resilience people hoped to see from it. This was the first major test of Bitcoin during a financial crisis, and it passed with flying colors.
The Halving Only Helped
Before we knew about the coronavirus and financial crisis, the Bitcoin “halving” was expected to be the big cryptocurrency event of 2020. It was a development that was scheduled to occur, and which resulted in Bitcoin mining blocks containing half of the Bitcoin they had previously yielded. This is something that had happened before with Bitcoin, and based on past instances it was expected to boost the price. It’s actually difficult to determine whether or not it did so, because Bitcoin movement around the time of the late-spring halving was also being influenced by investor reactions to the financial crisis. But we know that the halving didn’t hurt. Bitcoin got through this fairly major event without any kind of decline.
The Price Has Held Up
If we had merely seen strong Bitcoin values late in the spring or early in the summer, we could have explained them as temporary recovery spikes or results of the halving. But the truth of the matter is, the further we get from the onset of financial crisis, the stronger the asset appears. The price of trading Bitcoin in USD has continued to go up, and as of now is higher than it was a year ago. That doesn’t mean it can’t fall given Bitcoin’s history of volatility. But we’ve seen a fairly extended period of sustained strength at this point.
Optimistic Predictions Feel Realistic
In the past, optimistic predictions about Bitcoin have often been outlandish. It’s not out of the ordinary to see one analyst or another suggesting that the currency could soon climb to $100,000 or more in value. But these are purely speculative claims, often based on virtually no evidence. By contrast, analysts heralding a “new era” for Bitcoin of late seem to be more grounded in their predictions. This doesn’t mean those predictions are necessarily correct. But a more realistic approach to optimism may signal a stronger belief in Bitcoin’s fundamentals, as opposed to the unfiltered, gut-feeling enthusiasm we’ve seen in the past.
For all of these reasons, 2020 is currently shaping up to be Bitcoin’s best year to date.