When the World Health Organization announced the outbreak of the Covid-19 pandemic in December 2019, it shocked the world. The stock market, other tradable commodities, and our very own cryptocurrency market all took a hit due to the total lockdown and various restrictions in most countries.
With the ease of restrictions across most countries, the crypto market, which appeared to be booming, suddenly became questionable and unpredictable. For example, Bitcoin (BTC) — the world's first cryptocurrency – could be purchased for around $7,500 when the epidemic broke out. BTC is now worth well over $64,000, representing an 840% price increase. This is most likely due to various events taking place in 2020.
So, what happened to cryptocurrencies in the year 2020?
With our masks on and hands sanitized, let's go through the quarters of 2020, checking the market capitalization and essential news.
Quarter 1: Peaked Interest
At the beginning of 2020, the price gains for major cryptocurrencies persisted. As authorities worldwide fought to stop the Coronavirus from spreading beyond China, cryptocurrencies plummeted. The panic in the crypto community resulted in one of the fastest and most severe sell-offs in the history of world markets. Bitcoin prices plummeted by 39% in a single day on March 12, reaching a low of $3,850.
By the end of April, asset prices had risen dramatically. Bitcoin, meanwhile, doubled in price to $8600. The crypto startups began receiving phone calls from Wall Street at that point. Major players, celebrities, and anyone else looking to invest their future stimulus check began buying cryptocurrency.
Quarter 2: The "Halving"
When May arrived, the imminent "halving" of the Bitcoin network seemed like a blip in comparison to the Coronavirus's devastating economic impact. The halving resulted in the BTC mining reward from 12.5BTC to 6.25BTC.
I will try not to geek out entirely in trying to explain Bitcoin's "halving." Here we go: when miners mine a block every 10 minutes, they get a reward. That reward has been halved every four years since BTC's inception. BTC has a finite supply of 21 million coins; the halving was made to make BTC scarce. When the total BTC in circulation hits 21 million, no more BTC will be created.
Tons of crypto market analysts speculated this could lead to the price of BTC increasing to about $100,000. Below $9000 was all the price of BTC could hit even after the halving. The cost of BTC gets attention because other altcoins such as Ethereum (ETH) follows.
Quarter 3: Oh Sweet DeFi
All major cryptocurrencies went silent with steady growth, and that's when summer DeFi started.Financial applications on the blockchain were developed by developers aiming to disrupt financial institutions. These applications are usually termed Decentralized finance (DeFi).
DeFi is unique because it expands the usage of blockchain beyond simple asset transfers to more complex financial scenarios. Some of these DeFi projects include decentralized exchanges, lending platforms, and stable coins, all aimed to remove the limitation on the financial market.
Quarter 4: >758 Billion Crypto Market Cap
For the crypto community, 2020 was a good year. As new investors flocked to crypto coins in times of economic instability induced by the epidemic, the total market value of cryptocurrencies increased by about 300% to $758 billion in 2020. This was much higher than 2017's market cap, which is widely regarded as BTC's and other altcoins' breakout year.
Besides a massive increase in daily transactions, ETH saw a significant gain in market value. Dogecoin saw an increase in year growth, and the Binance coin (BNB) market cap also increased.
2021: The Aftermath
Most countries have opened their borders, and the influx of new members into the crypto community is still increasing. The total market cap of the crypto market has increased three times to 2.9 trillion from the covid-19 year. BTC's dominance and ETH's dominance are 43.8% and 19.2%, respectively. There are currently 12,882 cryptocurrenciesand 412 crypto exchanges.