2020: The year of Bitcoin

By paragism | paragism | 30 Dec 2020

“If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” – Milton Friedman

The US government is going to launch another $900 billion COVID-19 relief stimulus and already there is a high demand to increase it more. It is crystal clear that the global economic crisis has not ended yet and most probably we’re seeing the tip of the iceberg. The Federal Reserve is already executing its Quantitative Easing (QE) program to shelter the US economy. They are basically increasing the money supply by printing unlimited fiat notes. The continuous economic relief packages since the emergence of coronavirus have pumped stock markets globally. The technology stocks of the US are garnering tremendous attention from the investors. S&P 500 and NASDAQ-100 are at all-time-high range.  We can also see a renewed interest in cryptocurrency. Many cryptocurrencies have given multi-bagger return post COVID-19 and Bitcoin is getting amazing mainstream media coverage now.


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Rise of Bitcoin after Black Thursday

Bitcoin has already surpassed the crucial resistance of $25,000 and looks rock solid above that. This development is really awesome. Let’s not forget the Crypto Black Thursday. The events of March 12 against the backdrop of the emergence of pandemic really came as a shock. It was a global financial market crash but the effect was too large for the crypto market. There was cascading sell-off and the order book depth reduced dramatically due to liquidation of various DeFi vaults. Bitcoin dropped more than 50% in its biggest single-day plunge since 2013. The following weeks saw Bitcoin rebound from its $3800 low. Since then, Bitcoin has been continuously rising without any major correction. Yes, it is the best performing asset class of 2020 outperforming all traditional assets.

The new era gold standard

Satoshi envisioned Bitcoin as peer-to-peer money while believing in the gold standard. The Bitcoin logo has a lustrous golden colour to emphasize its radical association with gold.  Gold has got the cult asset status because the issuance is out of the hands of imperfect controlling authority. The scarcity and limited supply rate of gold give enough reason to use it to curb inflation. The store-of-value of gold is undeniable but the gold standard is used in no monetary policy in the world. If we compare the market efficiency of gold and Bitcoin, Bitcoin emerges as far more advantageous due to easy storage, fast transactions, fixed supply and programmed inflation. Most probably due to all these reasons, Bitcoin went through a positive price discovery mechanism over the ancient safe-haven asset in recent times.

The corporate buying and the surge of retail investors

Ripple is facing a new lawsuit from Securities And Exchange Commission (SEC) over the alleged sale of unlicensed securities. The price of XRP tanked with the news and various exchanges started to delist XRP. Altcoins are not sustaining their values against Bitcoin as they are facing strong resistance in the fiat market and ever-rising Bitcoin is making them weaker. This is a clear case of rotation into ‘majors’. ‘Majors’ means the large marketcap cryptocurrencies but even the number two cryptocurrency ETH is down -75% in BTC terms since its fiat peak of 2018 beginning.  XRP holders are also dumping their holding due to FUD. The money is flowing into Bitcoin in an unexampled manner and Bitcoin dominance has hit a 1-year peak. The game started a few months back when numerous corporates and hedge funds obtained BTC positions on a large scale. Mobile payment giant Square, founded by Twitter CEO Jack Dorsey, added $50 million value Bitcoin in the second quarter of 2020. Asset manager Stone Ridge Holdings purchased approximately $114 million value Bitcoin after some days as part of their treasury reserve strategy. Microstrategy, the largest independent publicly-traded business intelligence company, made the game even hotter with a Bitcoin buying spree. Their CEO Michael J. Saylor recently announced that the company was holding over $1 billion in Bitcoin. Digital asset company Grayscale Investments reached $16.4 billion in assets under management (AUM) some days back. The value is up from the $13 billion announced last week. Their largest asset holding remains in Bitcoin. Let’s not forget the massive Paypal news. PayPal launched their new service in the US enabling users to buy, hold and sell Bitcoin and some other cryptocurrencies in the month of October. Paypal brought Bitcoin to the masses and generated a new retail investor class overnight.

In the era of unprecedented monetary expansion and uncertainty, Bitcoin has emerged as the safe-haven programmed asset. Money is flowing out of the traditional asset class and entering into the immortal money. The new generation bank is running on cyberspace and empowering everyone to have their own hedge fund. Bitcoin is a fintech revolution where the law of thermodynamics defines the store-of-value. The decientralized network, owned by nobody, is running 24 hours a day non-stop. A big noise is already created in the year 2020 through the rushing investment. Bitcoin is now ready to take the world by storm through its disintermediated trust and incorrigible value.

Note: This post was first published here for Cryptowriter in association with

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Cypherpunk. Writing content which I love. Creeping on the blockchain. Twitter - @paragism_


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