Bitcoin ends the first quarter of 2020, a period that saw its price dump from new highs of $10500 to equally new lows of $3,800 within a matter of days. The number one cryptocurrency is no stranger to volatility, but the COVID-19 pandemic saw it and the rest of the financial markets fully enmeshed in bear territory. And yet, it would seem that Bitcoin has managed to fare better against the record-setting losses sustained by global equities and stocks.
With Q1 2020 at an end, Bitcoin has outperformed pretty much the rest of the financial markets amid the coronavirus pandemic. The health crisis routed all the gains made by several asset classes over the last few years and Bitcoin failed to prove its safe-haven status After posting 40% gains from the start of the year, the price of BTC closed with a 10% negative returns year-to-date by the end of the first quarter. At press time, Bitcoin (BTC) is trading at the $6245 to $6320 range with a market cap of $115 billion.
However, as we enter Q2 of 2020, the crypto markets appear to be stabilizing with Bitcoin performing better than major financial market indices. The Dow ended the Q1 2020 with a 23% drop, the Nikkei 225 was down 20%, while Nasdaq Composite closed with 14% down. The S&P 500 also suffered heavy losses ending the quarter down by 20%.
Is BTC set for a Rewarding Q2?
Bitcoin may have sunk to its quarterly and current yearly low within the last three weeks, but in that, it has jumped back up, gaining almost 90% of the losses it initially shed during the brutal bloodbath that blazed through the financial markets. While the bears continue to dominate the market, this price rally within such a short period is nothing short of impressive.
One important consideration is the massive amounts of fiat money being printed by various governments to stem the fallout from the COVID-19 pandemic and nurse the economy during such a downturn. While news of the stimulus packages hit the scene, Bitcoin seems poised for a bigger rise. Several crypto exchanges have reported a surge in new Bitcoin users within the period. Leading U.S. crypto exchange, CoinBase even reported that $1.3 billion in cash and crypto deposits flowed through its platform within 48 hours.
Other crypto assets including ETH and XTZ also posted sharp spikes in their respective trading volumes. Nevertheless, the Fear and Greed index suggests that it may be too early to get our hopes up.
What About the Halving?
Of course, this is another key consideration as the crypto community has been eagerly awaiting this event even long before the crisis hit. While being a historically bullish event for Bitcoin, this halving, which will see the supply of BTC slashed from 12.5 BTC per block to 6.25 BTC is in uncharted territory. There hasn’t been a downturn of this magnitude in a really long time, so there is no level of certainty at the moment.
Still, Bitcoin has had a history of being in the green over the last few years and the massive gains that it posted after the last halving means the long-term outlook remains decidedly bullish.
What are your thoughts about the price of Bitcoin in the second quarter of 2020? Is it due for another slide or is the bottom in and can only go upwards from here on?