You’ll agree — 2020 is not going to be the year we’ll remember with fondness in the future.
There have been plenty of changes in the world in 2020, including global political unrest, the Covid-19 pandemic shutdowns, and more.
All these things affected the crypto industry, which is why plenty of people decided to buy Bitcoin or other cryptocurrencies for the first time.
One thing is certain — there were plenty of factors that made BTC and other altcoins rapidly increase or decrease. Some of the ones we’ll list in this article have been affecting cryptos ever since they exist, while others are pretty novel.
Let’s check them out!
The Covid-19 Pandemic
The novel coronavirus disease that originated in China and took over the entire world made the WHO proclaim the pandemic. Many businesses were shut down for some time, severely affecting the global economy.
Therefore, people wanted to invest in a stable currency that would be able to keep their wealth intact. This resulted in an increasing price trend we’ve witnessed in all cryptocurrencies, including Bitcoin, which is on a good way to reach the December 2017 peak. Whether that will happen or not remains to be seen. (1)
The Falling Dollar
The decreasing value of USD was actually caused by the shutdowns and restrictions happening in the US (but also worldwide). In the last couple of months, we’ve witnessed the value of USD rapidly declining, and some experts fear that it could trigger a recession similar to the one that took place in 2008. (2)
Once again, this made many experienced and inexperienced crypto investors re-think their trading strategies and invest even more money in assets more secure than USD.
The Political Unrest
The political unrest has been affecting our planet on a big scale. Apart from protests in the US, there are unsatisfied citizens in many other countries, including India, Hong Kong, Iraq, and more.
Moreover, the United Kingdom is preparing to finalize the Brexit process, and Armenia has been waging war against Azerbaijan over disputed territory.
All of these factors and daily news related to them were important for cryptocurrencies and their fluctuations. (3)
The Presidential Election
Every time there’s a presidential election going on, the public opinion of US citizens is subject to significant shifts, and this causes many crypto price fluctuations. Whenever Donald Trump makes a statement or tweets about something, that has some effect on cryptocurrencies.
The outcome of the presidential election could also be very important to the crypto world and further affect the prices. (4)
Further Adoption of Cryptocurrencies
It’s not all bad news. Namely, the prices of cryptocurrencies are affected by many other factors except for the ones listed above. It’s no secret that Bitcoin and many other cryptos have come a long way on their process of mass adoption since many businesses — and even entire industries — open up to the idea of crypto payments.
Whenever there’s a step forward in the crypto sphere, investors react to it, making further price fluctuations. This is something that has been an integral part of crypto price changes for a long time and only continued in 2020.
Rules and Regulations of Cryptocurrencies
Many governments and lawmakers around the globe are still tackling cryptocurrencies, trying to make the best possible framework that would regulate them. Therefore, there are legal changes, both good and bad, that happen all over the world every now and then. These changes are closely followed by investors, especially if they live in a country where new laws took place.
If these countries’ economies play an important role on the global scale, adding legislative changes regarding cryptocurrencies causes further fluctuations in prices.
Finally, many industry professionals who are followed by thousands of crypto investors tend to release price predictions for some cryptocurrencies.
In that case, investors tend to act accordingly, which makes prices of some digital currencies go up or down.
These predictions are sometimes made deliberately in order to make people invest more in some cryptocurrencies, most of them being newbie investors.
The more experienced once don’t make rush investments based on half-researched analyses, although they themselves can sometimes set an example for less experienced ones who try to follow their footsteps.
In other words, experienced and successful investors, as well as crypto whales, can often impact the decisions of other investors and cause price fluctuations — sometimes deliberately and sometimes by accident.
As soon as many sceptics thought Bitcoin was not going to reach new heights again, 2020 happened, and BTC started going up at a very rapid pace.
This is also the case with many other cryptocurrencies, as investors have been following the news closely, making their decisions accordingly.