Crypto So Far in 2020

The primary discussion point over the last couple weeks was the escalating tensions between the US and Iran, which are believed to have prompted a price surge price for bitcoin and other cryptocurrencies, according to market analysts.

Bitcoin has risen in value by around $800 after the US assassination of Islamic Revolutionary Guard Corps Maj Gen Qassem Soleimani on 3 January, taking its price above $13,000 and bucking a downward trend that began before Christmas.

The cryptocurrency is notoriously volatile, making it difficult to attribute one single factor to major market movements, however geopolitical uncertainty is often cited as a contributing factor to price increases.

“Bitcoin, the world’s largest cryptocurrency by market capitalisation, jumped 5 per cent as news of the strikes broke around the world on Friday,” said Nigel Green, chief executive of financial consultancy firm deVere Group.

“Simultaneously, the price of gold – known as the ultimate safe-haven asset – also moved higher. The latest bitcoin price increase underscores a mounting consensus that bitcoin is becoming a flight-to-safety asset.”

A similar trend happened in August when global stocks were rocked, and China's yuan was devalued due to the ongoing trade war between the US and China. When traditional markets are unsettled, investors typically look to non-sovereign assets and currencies like gold and bitcoin to safeguard their wealth.

Aside from the recent geopolitical factors, the three primary talking points for the crypto space in 2020 are:

  1. The Bitcoin halving
  2. Continued progress for Ethereum’s transition to Ethereum 2.0
  3. Central bank-issued digital currencies

The pre-and-post price performance of Bitcoin has been the most bullish during the 6-12-month period preceding the halving dates and the 6-12-month period after the halving dates. If we assume that history will repeat itself, the price of Bitcoin over the next year and a half is very likely to be much higher than it is today – and that may at the very least help to dispel some of the bearish bias surrounding Bitcoin at the moment.

Ethereum 2.0 (Casper) has been worked on for years and has undergone countless iterations. It's an extensive re-architecture of the Ethereum platform, involving new components such as proof of stake-based consensus, sharding (horizontal partitioning), a WebAssembly-based VM, and more. These changes, if successful, will provide vital boosts to Ethereum's security, scalability, and decentralization.

2020 is also looking hopeful to bring an increase in the number of bitcoin retail investors and people using bitcoin and cryptocurrencies for payments. Bakkt, a New York Stock Exchange-owner backed bitcoin and cryptocurrency venture, announced last month it plans to launch a consumer app for cryptocurrency purchases in 2020.

Its been a good start to the year, and there is growing consensus it will keep going.