It has been precisely a year since one of the worst trading days in the history of all financial markets. On March 12th, 2020, the day that became known as Black Thursday, every market was painted in dark red as the health and financial consequences of the COVID-19 pandemic became real to the entire world.
While the heavily-regulated stock markets activated circuit breakers to ease the pain, no such options were available for the unregulated crypto market. As such, in a day when the S&P 500, the Nasdaq, and the Dow dropped by 10%, bitcoin nosedived by about 50%, ETH by 60%, BNB by 65%, etc.
A year later, everything seems different. The virus has changed the (financial) game. This is especially valid for the cryptocurrency industry. In fact, looking at what transpired last year on this date now – it seems like the best thing that could have happened for BTC and the entire field.
How Bad Was the Black Thursday?
As mentioned above, the entire crypto market crashed on this day last year. Perhaps “crashed” is not a strong enough word to describe what occurred price-wise. The first-ever cryptocurrency was already feeling the adverse effects of the virus-induced financial crisis and had dropped over $10,000 to $7,500 in a matter of days.
However, no one was prepared for what happened next – in a matter of hours. Bitcoin fell by about 50% from its already declined price tag and bottomed at $3,850 (on Bitstamp).
Ethereum, the second-largest cryptocurrency by market cap, plummeted by about 60% from roughly $200 to beneath $90. Binance Coin (-65%) nosedived from $17 to $6.5, Litecoin from $50 to $22, etc.
Generally, the smaller the market cap of a coin is, the more pain it felt. Just to put it in the perspective of how bad it was, the cumulative market capitalization of all cryptocurrency assets went from $220 billion to $108 billion.
Naturally, skeptics like Peter Schiff used these developments to lash out. Furthermore, even those on the fence questioned the entire industry and especially bitcoin’s potential to serve as a hedge similar to gold. For comparison – the bullion declined by only 5% on that day.
The Recovery Phase
Bitcoin, and most altcoins, bounced off from the aforementioned lows rather quickly but still traded well below the previous yearly highs – in fact, they were all still in the red YTD.
However, the recovery process had begun. Slowly but surely, the assets started regaining value. Then, the situation changed entirely.
When most crypto outsiders were still neglecting the industry, the legendary hedge fund manager Paul Tudor Jones III said he bought bitcoin to fight the potentially increasing inflation levels.
While his statement was passed by some media outlets, it actually had a significantly more profound impact than even he could have imagined. Ever since Jones showed the traditional financial world that BTC is not only for those who are “in for the technology,” numerous more followed.
Stan Druckenmiller and Bill Miller were among the first to declare their support for the first-ever crypto publicly. Then came the institutions and corporations.
While names such as MassMutual, Ruffer Investment, One River Asset Management, and even Tesla bought BTC in the following months, perhaps none has had a bigger impact than the NASDAQ-listed business intelligence giant – MicroStrategy.
Michael Saylor – the company’s CEO, a former bitcoin skeptic of his own, became arguably the most vocal BTC advocate and uses every opportunity to buy portions of the asset for himself and the firm he founded more than three decades ago. As of now, MicroStrategy owns over 90,000 coins (worth above $5 billion).
A Year Later: What’s Changed?
Whether it was the fast price recovery (will be discussed later) or the number of large names that bought in, or, perhaps, both, the cryptocurrency has been openly praised left and right from representatives of the traditional financial industry.
Former skeptics, such as JPMorgan, have outlined its benefits on multiple occasions and even suggested that bitcoin’s rise could harm gold. Looking at the prices of the two assets a year later, one can find some merit in this stance.
Even the “bitcoin is the digital gold” narrative has received a significant boost. While that’s still debatable, there’s no argument that bitcoin’s legitimacy has skyrocketed in the past twelve months.
Last but Definitely not Least: The Prices
All of the events described above, and perhaps the effects of the halving, had their impact on bitcoin’s price. If we rewind the calendars a year back, it would be hard to imagine that we would be discussing if BTC would jump over $60,000 today, wouldn’t it?
Ok, $60,000 might not be here yet, but $58,150 was just several hours ago. This meant that the asset had increased its value by 1,410% since its $3,850 low registered on Black Thursday. This is also almost 3x higher than the previous record registered in December 2017.
Remember all those who claimed that bitcoin would never reach that price tag again? Now, it’s just a distant memory, and the COVID-19 pandemic had its (positive) impact on that.
Other milestones include exceeding $1 trillion in market capitalization. In other words, BTC’s market cap now is about 10x higher than the market cap of all crypto assets during the dip on March 12th, 2020.
Moreover, BTC is the 6th largest asset by this metric – it surpassed giants like Samsung, JPM, Berkshire Hathaway, Tesla, and Facebook, while the next in line are Google and Amazon. Again – can you imagine BTC being bigger than Facebook a year ago?
But It’s Not Just BTC
Although bitcoin was the primary focus of this article, it’s worth mentioning other notable performers and developments in the industry. Eleven months after dumping to $88, ETH painted a new all-time high at $2,050. Even if we look at today’s price of $1,800, the asset is still nearly 2,000% up.
Litecoin is 720% up, while Binance Coin and Cardano are among the best performers. Both assets recently registered new ATHs at $350 and $1,50, respectively, which meant increases of 5,300% for BNB and 8,200% for ADA.
Lastly, this time for real, 2020 saw the emergence of two new concepts that have taken the world by storm – decentralized finance and non-fungible tokens.
A year ago, there were less than $1 billion locked in all DeFi projects. Now, twelve months later, the amount has skyrocketed to over $41 billion.
NFT is making a serious mark as well. The craze has garnered the attention of numerous artists, and the prices paid for some digital art collections have gone through the roof – just yesterday, Beeple’s “The First 5,000 Days” artwork was sold for a record amount of $69 million.
While it’s difficult to conclude that all of this transpired solely because of the COVID-19 pandemic, it’s safe to assume that the virus wasn’t that bad for the cryptocurrency industry