There’s no denying that the recent US elections consumed most mainstream media for a good period of time. The elections were a hot debate for all internal parties, and interestingly to the rest of the world, too. The crypto community was no exception to this. Let’s take a look at Bitcoin and the US election to see if there was any correlation between the two, and if so what the implications were.
When the last US elections took place, Bitcoin was trading at around $750. In the year following the inauguration of Donald Trump, the BTC price shot up to its all time high of just below $20,000 in 2017. It’s cause for debate whether these two instances are intertwined, however the S&P 500 markets experienced a striking similar pattern. During the weeks leading to the election the markets experienced high volatility with overall drops of 6%. Shortly after the election the markets reversed and set off to their all time highs for the next fourteen months. As the two markets, the stock and cryptocurrency markets, seemed to dance a somewhat parallel dance, one could argue whether the crypto markets were influenced by the stock markets, which were influenced by the elections.
Prior to 2020 Bitcoin was viewed as a volatile investment model with a speculative market. Following the pandemic and months of troublesome stock market trading, the original cryptocurrency shocked many when it proved itself to be a strong store of value and a reliable asset.
The Covid 19 virus had devastating effects on multiple markets including global economies. With no market left unscathed, the stock markets saw a dramatic loss in trading on a day marked as Black Thursday. The Wall Street markets all reported the worst trading day since 1929’s Great Depression. Marking a harrowing loss of funds for many investors around the world, the cryptocurrency market was no exception. However, the crypto market saw a relatively quick bounce back, and many investors jumped on the bandwagon.
“Safe haven” might be a stretch to call it, but the evidence is there to suggest that many took their money from the downtrodden stock markets and put it into Bitcoin. The evidence is there to support that many recipients of the US stimulus checks handed out by the government put their money straight into BTC. It’s also worth noting that those that did invest their stimulus checks in Bitcoin in April have seen increases of 147% (at the time of writing).
2020 also saw the first influential corporate backing of the cryptocurrency. Big companies like Square and MicroStrategy announced that they were putting their reserves into the digital asset. The mobile payments app, Square, recently purchased $50 million worth of Bitcoin, while MicroStrategy purchased $250 million shortly followed by $195 million. This happened shortly before PayPal announced their support of cryptocurrencies, reporting that the company would include Bitcoin, Ethereum, Bitcoin Cash and Litecoin. On the day that the company announced their support their shares increased by 6%.
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The international Covid 19 pandemic spread havoc throughout many countries, and not just their healthcare systems and civilians, but their economies too. While some have bounced back more quickly than others, there is likely to be a tumultuous wake of destruction for months, perhaps years, to come. Despite the destruction, one thing has become evident and that’s that Bitcoin reigned supreme over the pandemic.
A date that will be known as Black Thursday for decades to come is the stock market crash in 2020. Starting in February, the devastating downtrends of the market continued to hover until April. The crash was the worst the Wall Street markets have seen since trading in the Great Depression plummeted in 1929. Also commonly known as the Coronavirus Crash, the bear market is a clear indicator towards the recession that the Covid 19 pandemic instigated.
While the crash officially began on 20 February, it wasn’t until March that the truly devastating consequences were seen. Playing out in the charts, the first of three big hits happened on 9 March with the Dow Jones Industrial (DJI) dropping 7.79%. Marking a 20% decrease from its most recent peak, this brought the 11 year bull market run to an end – the longest in American stock market history.
The next blow happened later that week on Thursday, 12 March, dropping another 9.99%, and then in the final hit, what has become known as Black Monday II, the DJI dropped a further 12.93% on 16 March. Called Black Monday, Black Thursday and Black Monday II respectively, the devastation rippled through many markets, economies, and investors’ portfolios.
Unfortunately Bitcoin was not exempt to the mass sell off, and fell prey to the bears as well. The Bitcoin market was doing relatively well, with 1 BTC trading at $9,000 on 6 March before falling to $7,600 on 12 March. Things then turned really south as investors started pulling their money from all their avenues. By 16 March, Bitcoin was trading at $4,850.
Thankfully, Bitcoin bounced back quickly in a brave display of resilience and was trading over $8,000 before the end of April. The cryptocurrency continued to grow as assumably investors took their money from the stock market and instead invested it in the decentralized currency following a series of stimulus checks and banks printing money. Ironically, cryptocurrencies were created as a response to the Global Financial Crisis of 2007 – 2009 to offer people an alternative monetary system that is exempt from government and banking interference.
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