What happened in the cryptocurrency market in the first quarter of 2020

In a series of four articles, the editors of BeInCrypto cover the key world events that affected the cryptocurrency market in 2020

Over the past year, bitcoin has not only managed to prove its resistance to skepticism from the traditional financial market, but also managed to attract real legends from the world of economics.

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The beginning of the first quarter of 2020 was particularly hot for the leading cryptocurrency. So, in just the first month, bitcoin rose by more than 30% from $7203 to $9544. The editors of BeInCrypto have chosen the key points that will make the first quarter of 2020 memorable.

Harbinger of the storm

An explosive start to the year for bitcoin, however, almost broke down due to the resonant decision of the 45th US President Donald Trump to approve the operation to eliminate the Iranian General Qasem Suleimani. Although bitcoin, as a rule, does not correlate with events from the traditional economic and political world, the rate of the digital asset in just a day sank from $7140 to $6916 (-3.16%) against the background of the murder of an Iranian general. Nevertheless, the negative trend did not last long, and on January 4, the price of the cryptocurrency passed the mark of $7340.

Source: coingecko.com

After peaking at $8,389 on January 8, Bitcoin declined. A couple of days later, the COBINHOOD cryptocurrency exchange suddenly she said on the freezing of all trading operations for a month to audit user balances, and bitcoin experienced a correction to $7704.

However, even this did not stop the leading cryptocurrency from jumping on January 14, when the price of BTC jumped from $8,151 to $8,747 per day. At the same time, one of the largest industry ETFs announced the launch of a regulated stablecoin. Just the next day, on January 15, the Bitwise cryptocurrency fund withdrew one of the last applications for a bitcoin ETF from the US Securities and Exchange Commission (SEC). It is noteworthy here that throughout 2019, it was the topic of launching a bitcoin ETF that remained the main trigger of the bullish trend for the cryptocurrency.

Source: coingecko.com

After a few days of increased volatility, bitcoin reached $9150 on January 19. At that time, the cryptocurrency strengthened to such heights only in early November 2019. On the same day, the US House of Representatives Financial Services Committee announced that bitcoin is in demand among local criminal groups, as well as supporters of the white supremacy movement. Against the background of such a resonant statement, bitcoin fell back to $8638.

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The next day, January 20, the situation was aggravated by South Korea’s plans to introduce a tax of 20% on income from cryptocurrencies. Having fallen to the level of $8244 on January 24, bitcoin began a gradual ascent and already on January 29 passed the mark of $9380. In the same days, search queries for bitcoin halving in Google reached a new record, and at the end of January, Japan officially recognized the possibility of issuing a digital currency of the Central Bank. On January 30, 2020, the World Health Organization (WHO) for the first time declared the outbreak of a new virus a “public health emergency of international concern”. Bitcoin did not immediately pay attention to this event, which a month later led to the collapse of all global financial markets.

Invisible enemy

In early February, Grayscale registered the GBTC bitcoin trust with the SEC. At that time, not everyone paid attention to this, although it was this trust that later became one of the reasons for the shortage of bitcoin on the market in October-November 2020. At the same time, the Monetary Authority of Singapore (MAS) announced the entry into force of the law “On Payment Services”. Since then, the Asian market has become less and less seen as a safe haven from regulatory harassment.

In early February, China’s stock indexes fell by 8% on the back of news about the raging coronavirus. At that time, the news about the virus was limited only to the Asian market and had not yet become a global problem that provoked a more active digitalization of the economy.

By the end of the first week of February, the price of bitcoin has updated the maximum since the beginning of the year and broke the mark of $10,000. Along with the growth of BTC, the amount of assets in DeFi projects also increased, exceeding $1 billion. If on December 31, 2019, the amount of ETH pledged in the DeFi market was $670 million, then by February 8, 2020, this figure exceeded the mark of a billion US dollars. At that time, the most popular decentralized application was MakerDAO — its dominance index was 60%, and the second and third places were occupied by Synthetix and Compound, which store $156 million and $125 million in their contracts, respectively.

See also: What the future holds for the DeFi market: experts ‘ opinion

On February 18, the U.S. Marshals Service held an auction for the sale of confiscated bitcoins. About 4040 bitcoins were put up for auction (~ $39 million at the exchange rate at that time). Despite concerns about a possible dump of the BTC price due to such a large auction, on February 19, the cryptocurrency rose from $9,684 to $10,120. However, after that, the price of bitcoin began a prolonged decline.

On February 19, 2020, the FSB and the Bank of Russia took the first steps to limit the development of the domestic cryptocurrency market, agreeing to prohibit payment in cryptocurrencies in the territory of the Russian Federation. This proposal was later approved in the Digital Financial Assets Act.

Black Friday

March became not only for bitcoin, but also for the whole world a reminder of the crisis times of the past years. At the beginning of the month, bitcoin opened at $8642. On Sunday, March 8, 2020, Saudi Arabia announced price discounts for oil in the region of $ 6-8 per barrel for consumers in Europe, Asia and the United States. The Saudis ‘ decision sent prices into a tailspin, plunging the price of Brent by 30%, the biggest drop since the Gulf War.

A couple of days later, on March 10, Saudi Arabia announced an increase in production from 9.7 million barrels per day to 12.3 million. The uncontrolled development of the situation continued to negatively affect the dynamics of oil prices, sending them to an 18-year low.

Source: coingecko.com

The Russian-Saudi price war has not spared bitcoin. On Friday, March 13, 2020, its exchange rate collapsed to a one-year low of $4120, and its market capitalization shrank to $75 billion. At the same time, Trump declared a state of emergency in the United States due to the coronavirus.

Bitcoin was able to return to the level of $10,000, albeit in the short term, only in early June.

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