In a series of four articles, the editors of BeInCrypto cover the key world events that affected the cryptocurrency market in 2020
The second quarter of 2020 was no less intense than the previous one. Bitcoin managed to collapse to a one-year low amid the coronavirus pandemic, a Chinese court for the first time recognized ETH as property, and regulators in the United States hacked the TON project to the root. We recall what distinguished the second quarter of the outgoing year.
Read the first part of the series of articles devoted to the key events of the first quarter here.
The entire second quarter of 2020 was spent for bitcoin under the banner of recovery. After the collapse of the price to $4120, some in the cryptocurrency community expected a further drawdown to $1200. Unfortunately or fortunately, this never happened. The last time the price of bitcoin fell below $5,000 was in March, and it hasn’t happened again since.
However, the absence of sharp price fluctuations did not mean a lull in the cryptocurrency market itself. For example, in early April, a court in the United States rejected Telegram’s request to clarify the scope of the ban on issuing Gram tokens exclusively to non-American investors.
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It was assumed that investors outside the United States would be obliged not to sell assets to Americans, and the developers of TON would create appropriate restrictions on wallets. The court sided with the US Securities and Exchange Commission (SEC), confirming that the assets fall under the definition of a security and did not pass due legal registration.
After that, the Libra association abandoned plans to create a single global digital currency due to pressure from regulators. At that time, Libra representatives continued to claim that the project would be launched in 2020.
In general, bitcoin recovered quite smoothly throughout April – with the exception of the night from April 29 to April 30. Then the price of BTC/USDT jumped from $7850 to $9413, thus returning to the pre-crisis level. However, the cryptocurrency almost immediately fell back to the range of $8700-$9150. Bitcoin managed to get close to the $10,000 mark on May 9 (two days before the halving), when the price of the cryptocurrency reached the level of $9989.
HYIP of the year
Just a couple of days before the halving, billionaire and successful trader Paul Tudor Jones made a loud statement about bitcoin, calling the cryptocurrency the gold of the current generation. Jones told his clients that bitcoin is an insurance policy against the risks associated with the current policy of central banks.
This statement will still play a role in the future on the jump in bitcoin’s volatility.
On Monday, May 11, 2020, there was a widely anticipated community reduction in the block reward on block 630,000. Since then, the reward for mining a block in the bitcoin blockchain network has been 6.25 BTC instead of the previous 12.5 BTC.
Bitcoin maximalists from the very beginning of 2020 regarded the halving of bitcoin as the key reason for the return to historical highs (which in the long run turned out to be true, but only partially). Against the backdrop of reduced rewards, the price of bitcoin has sharply increased volatility, jumping from $8,544 to $8,921 in a matter of hours. However, in the short term, halving did not have much impact on the price of the leading cryptocurrency.
At the same time, Yves Mersch, a member of the executive board and deputy chairman of the supervisory board of the organization, said that the European Central Bank is developing its own digital currency of the Central Bank (CBDC) for retail trade.
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A day after the halving, an equally important event occurred in the cryptocurrency community, although not as rosy as in the case of bitcoin. On Tuesday, May 12, 2020, Telegram founder Pavel Durov announced that the company has stopped working on the Telegram Open Network (TON) blockchain platform due to the prohibitive rhetoric of American legislation.
A week later, a lawsuit was filed against the BitMEX cryptocurrency exchange, in which the exchange was accused of “deliberately forming from the very moment of its foundation to carry out countless illegal actions.” The cryptocurrency community did not immediately attach importance to the lawsuit, which in the long term led to disastrous consequences for the management of the exchange.
The beginning of the DeFi madness
At the end of May, the investment company Grayscale Investments reported back about doubling the volume of investment in bitcoin. Then Grayscale began to buy cryptocurrency more than the miners had time to produce. Later, this investment company became one of the leading suppliers of bitcoin to the market of traditional finance.
For the first time since February, bitcoin was able to return to the $10,000 level – albeit for a short time – in the first days of June. In general, June was relatively stable for bitcoin. Its rate all month smoothly descended in the direction of $9000. Bitcoin was able to finally gain a foothold above the $10,000 mark only at the end of July.
It is from June that a massive hype around decentralized finance (DeFi) will begin in the cryptocurrency market. In the first month of summer, the total capitalization of the DeFi sector broke the $2 billion mark. A little later, the cryptocurrency lending project Compound surpassed the popularity of the market leader DeFi-Maker.
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