As we had predicted throughout at LLM – Luxury Lifestyle Magazine, 2020 was a big year for cryptocurrency, with the leading digital currency, Bitcoin, quadrupling in value in the calendar year.
The timing is rather apt, with the currency reaching all-time highs exactly 12 years on from the formal launch.
The decentralised currency was invented in 2008, by pseudonymous creator Satoshi Nakamoto, whose true identity remains unknown, designed as a solution for anonymous, deregulated peer-to-peer transactions outside of state or national control.
At the time of writing, one Bitcoin holds a US Dollar valuation of over $34,000, up from a January 2020 high of $9,501. A staggering achievement during one of the bleakest years in modern history. However, in some industry experts’ eyes, it is the influence of the global coronavirus pandemic that has generated almost perfect market conditions for cryptocurrency to thrive in.
With traditional investment markets proving as volatile as at any time on record, there has been growing interest in alternative assets, and cryptocurrency has proven more resilient than many staple commodities, including crude oil, during the crisis.
In fact, it has been reported that some US citizens took to the blockchain in record numbers to spend their stimulus checks during the first wave of coronavirus in America. While the risk-averse among us might wince at the prospect, those who did invest their $1,200 in Bitcoin have already tripled their investment. Fortune favours the brave.
While cryptocurrency’s relative stability against a backdrop of a massive global recession might have enhanced its trading value heading into the new year, there are certain innate characteristics of Bitcoin that would likely have seen it increase in value in a COVID-free 2020.
Firstly, through smart trading software (check Bitcoin system app, for example), it is getting easier for first-time traders and inexperienced investors to get started in cryptocurrency. Secondly, 2020 was a year of Bitcoin’s fabled ‘halving’ event, which traditionally increases value, as demand remains stable and supply of new currency is halved.
It is the combination of weak fiat currencies (the US Dollar is trading at its lowest value since spring 2018), interest rates, traditional stock volatility, that makes cryptocurrency such an enticing prospect heading into 2021, leading many of its fervent supporters to claim that it has supplanted gold as a value store.
Financial institutions, initially sceptical of cryptocurrency as an asset class, grow more and more interested in the prospect, and PayPal’s decision in autumn of last year to accept Bitcoin on its platform is another tick in the box for crypto’s mainstream credentials.
While cryptocurrency enthusiasts expected Bitcoin to end 2020 in a strong position, perhaps even the most optimistic supporter could not have foreseen smashing the $30,000 value threshold just three weeks after clearing $20,000.
Paolo Ardoino, CTO of crypto exchange Bitfinex, said: “The number keeps going up as the market has seemingly never been more bullish. We see a very bright future ahead for all bitcoin holders.”
While there has been a small dip in the few days since Bitcoin reached its all-time peak of $34,800, Ardoino claims that the underlying data on Bitfinex suggests that the leading cryptocurrency’s value will remain high in 2021.
“Bitcoin dominance is inevitable after a tumultuous year that has seen the king of crypto surge in price from under US$4,000 in March to a new all-time high.
“While a growing institutional presence has been part of the narrative of the current bull run, we may see increased retail interest in Bitcoin as a form of digital gold. This could also bolster interest in the many innovative projects coming to fruition within the digital token space.”
While Bitcoin remains the synonymous cryptocurrency for casual onlookers, it is not the only coin experiencing bullish conditions, with another big-name player, Ethereum, also reaching four-figure values for the first time in two years, having experienced a 40% increase in value last week alone.
Ethereum is the second-biggest cryptocurrency by market value, only surpassed by Bitcoin, and despite its relatively low price, some industry experts have predicted the coin could rise to values over $9,000 USD in the near future.