Bitcoin, Could it be the Best Performing Asset in 2020?
Many people became instantly wealthy when Bitcoin debuted in 2017. Although the price of Bitcoin is down around 50 percent on last year’s high, it is up around five percent in 2020. The crash caused by the COVID-19 virus has cryptocurrency investors scrambling to keep up with, and make sense of, what is now a rapidly evolving and dynamic situation.
Union Bank of Switzerland (UBS) economist Paul Donovan noted in his April 24, 2020, daily update suggesting economists were facing three levels of uncertainty. He writes that uncertainty or changes about the virus, as well as doubt about the policy response and the economic response, all of which can change economic outcomes.
Although there is a great deal of uncertainty, Bitcoin’s highly anticipated halving during Mid May remains unchanged. This event will mark the third time the number of Bitcoin’s rewarded to miners who maintain the network will be halved, dropping from the current 12.5 Bitcoin per block to 6.25.
Bitcoin Halving Is Expected to Continue
It is expected that Bitcoin halving will continue at approximately four-year intervals. If the practice takes place as scheduled, the supply of 21 million Bitcoin generated by the network will not happen until well into the next century.
The founder of Quantum Economics, Mati Greenspan, does not see any reason why Bitcoin will not continue to outperform other assets. With the amount of money that is being injected into the system in advance of the upcoming halving, there is no reason to think that Bitcoin will not continue to perform well.
Although the survey of major Bitcoin investors was taken before the current crisis, at the time, investors expected to see the price of Bitcoin surpass $20,000. Danny Scott, CEO of CoinCorner, based in the Isle of Man, believes the price of Bitcoin will continue in that direction, and even beyond.
Governments are Printing Money
Central banks and governments are running their money printing machinery flat out. President Donald Trump has recently signed a relief package designed to help small businesses. The package also targets the healthcare system, helping it to cope with the cost of fighting COVID-19. This particular package was set at $484 billion. This relief package is over and above the $2 trillion package granted earlier.
Responding to the latest stimulus package, stocks on Wall Street climbed, shaving early week losses.
It is expected that lawmakers in Washington will put together another package to follow on the heels of the CARES Act, which saw millions of people in the US receive $1,200 or more. Some of this money has ended up in Bitcoin, according to the chief executive of Coinbase, one of the largest exchanges in the country.
Bitcoin Prices are Up
During the last 12 months, Bitcoin prices have gone from $5,500 to $8,500 per Bitcoin. This 40 percent increase may reflect the plans of tech companies for crypto and digital finance services. When implemented, these services may prod central banks to move in the direction of digital currencies.
Some analysts believe that Bitcoin could firm up its status as a safe-haven asset, thanks to the current coronavirus pandemic. In these uncertain times, investors are buying Bitcoin alongside gold.