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New Year’s Eve Digest: Top Key Events On The Crypto Market In 2020

2020 can be compared to a roller coaster: the events unfolded so quickly and sometimes unpredictably that now, perhaps, the world is ready for anything. This year turned out to be no less intense for the cryptocurrency – a bloody “Black Thursday”, historical highs, new developments, a boom in DeFi projects, and the same sincere faith of enthusiasts in the crypto industry. Let’s remember the events that became key in the crypto market in the past year.

“Goodbye, Bear Market”

2020 began for Bitcoin with a level slightly above $7,000, but by the end of January, the asset gained momentum and rose to $9,000. Crypto enthusiasts finally breathed a sigh of relief – the crypto market began signaling its readiness to exit the protracted bearish phase, which pretty much rattled their nerves in 2018 and 2019.

Already in February, Bitcoin broke through the critical resistance level of $10,000. Against the backdrop of the bullish movement of the flagship cryptocurrency, altcoins also “cheered up” and showed a significant increase. In particular, Ethereum showed excellent results – the asset crossed the $200 psychological mark for the first time since September 2019. As a result, in February, the total cryptocurrency market capitalization reached $286 billion.

Bitcoin hits the new historian high reaching $28,000

Bitcoin presented an excellent Christmas gift – on the night of December 26, its price rose to $25,070. But Bitcoin did not stop there and confidently continued its parabolic rally. Already on December 27, BTC soared to $28,000, having risen in price by $3,500 per day. Thus, Bitcoin has set an absolute historical record, and, apparently, is not going to leave the ascending channel yet.

2020 Bitcoin closes with impressive market indicators: BTC dominance index soared to 69.2%, market capitalization reached $462 billion. But this is just the beginning of a bull run – according to leading traders, in 2021, Bitcoin will show new records and, quite possibly, six-figure amounts. The predictions are more than optimistic: Robert Kiyosaki is convinced that BTC will reach $50,000 by the end of the year, trader Villi Woo bets on $200,000, investor Scott Minerd sees Bitcoin at $400,000. In general, 2021 promises to be hot.

“Black Thursday”

COVID-19 was the defining event of 2020. The first outbreak was reported back in December 2019 in Wuhan (China), but only until February 2020 the rest of the world realized that this was far from a local problem. Already by March 11, more than 118,000 cases of COVID-19 infection were recorded, the pandemic has spread across all continents.

On March 12, Donald Trump announced a ban on entry to the US from Europe. The markets reacted instantly with panic – the indices fell by more than 20%, the oil price entered a record minus. On the cryptocurrency market, events also unfolded extremely dramatically: on the night of Thursday, March 13, Bitcoin fell to $3800, having lost more than 50% of its value in a day. Ethereum also plunged below $100 for the first time since December 2018.

Halving Bitcoin

On May 11, the Bitcoin halving took place – an event that has been hotly discussed in the crypto space since the beginning of 2020. That is the third Bitcoin halving, as a result of which the reward for the mined block was halved from 12.5 to 6.25 BTC. This process is incorporated into the protocol of the “father of cryptocurrency” Satoshi Nakamoto to control the emission of Bitcoin and curb inflation.

After the halving, the excitement around Bitcoin was even hotter – as it should be, analysts were racing to make predictions about the price of Bitcoin and its future as an asset. Well, Bitcoin ends 2020 in a bullish phase, some predictions have become reality.

Institutional money inflows

In 2020, Bitcoin received a cherished “gift” – trust and increased demand from institutional investors. Among the major players who staked on Bitcoin were famous billionaires – Paul Tudor Jones, Stanley Druckenmiller, Skype founder Jaan Tallinn, and others.

Major companies and hedge funds have been buying up Bitcoin masse this year and are likely to continue to grow their crypto assets. In total, MicroStrategy acquired 70,470 BTC worth over $1 billion, Square bought BTC for about $50 million, Galaxy Digital Holdings invested $134 million in BTC.

DeFi boom

The decentralized finance (DeFi) sector became the undisputed mainstream in 2020 – no one on the crypto market probably received so much approval and criticism at the same time. The biggest hype around DeFi began in the summer when traders actively engaged in “yield farming”. In a matter of days, millions of dollars were funneled into DeFi tokens, some of which skyrocketed 1000% or more.

If, in January the volume of digital assets blocked in DeFi protocols did not exceed $800 million, then by the end of 2020, it reached $14 billion. One of the most popular DeFi tokens, YFI, rose from $32 in July to $44,000 in September, demonstrating an increase of 137,400%. At the end of 2020, the DeFi market entered a correction stage.

The hard fork in the Ethereum network

On January 2, a Muir Glacier hard fork took place on the Ethereum network on block #9 200,000. This update has delayed the activation time of the so-called “difficulty bomb” – an algorithm that makes it more difficult to generate new blocks in the network. Roughly the “difficulty bomb” after the upgrade was postponed by 4 million blocks, which is approximately 1.7 years.

That is the third hard fork in the Ethereum network, which removes the “difficulty bomb” from the “X hour”. After the launch of Muir Glacier, the developers sharply raised the question of the need to completely eliminate the “complexity bomb”.

Ethereum 2.0 launch

There has been talking about updating the Ethereum network since the end of 2018; so when Vitalik Buterin announced the start of the deposit contract, the crypto community took this news with a bang. Until the last moment, the launch of the first genesis block of Ethereum 2.0 remained intriguing: only 4 hours before the end of the deadline, the missing 25% of ETH was contributed.

Beacon Chain launched on December 1st. At the end of December, more than 1.21 million ETH ($690 million) have already been blocked, which is about 1% of the total Ethereum emission. If there are no delays, Ethereum 2.0 will roll out over the next few years.

Pavel Durov closed the TON blockchain project

On May 12, 2020, Pavel Durov announced the termination of work on the integration of the TON blockchain into the Telegram ecosystem. The development of the project lasted about 2.5 years and attracted investments worth more than $500 million. The “stumbling block” for further development was the claims from the US regulator.

The TON blockchain platform was supposed to perform the functions of a payment system with its own GRAMS cryptocurrency, provide data storage, and exchange messages between users. But according to Durov, the developers were unable to cope with “a vicious circle in which it is necessary to reckon with the still strong centralized infrastructure. “

The rise in popularity of Uniswap

In 2020, the Uniswap decentralized cryptocurrency exchange has become one of the most popular in the DeFi space. Unlike traditional crypto exchanges, Uniswap has refused to charge issuers for the placement of new tokens, from verifying the identity of users. Uniswap has become a real magnet for traders as the platform allows them to participate in “yield farming” and generate increased profits.

The excitement surrounding Uniswap has resulted in exponential growth in the exchange’s performance. In particular, Uniswap’s average daily trading volume jumped to around $220 million. Uniswap has also released its own UNI token, which has a market cap of around $560 million.

Stablecoin regulation bill introduced in the US

In December 2020, a bill to regulate the issuance of stablecoins (the STABLE Act) was submitted to the US Congress. According to the initiative, any stablecoin can be issued only after prior written approval from the regulator and obtaining a banking license. According to the authors of the bill, this step will help “prevent the risks associated with stablecoins and digital currency Libra from Facebook.”

The crypto community reacted sharply to the bill, calling it a “rollback for the United States.”

US government talks about creating a digital dollar

The United States has finally moved from words to deeds: in January, The Digital Dollar Project was launched to develop the “shape” of the digital dollar. According to the authors of the project, the digital dollar is considered as the third currency format that will be backed by the Fed’s reserves and will allow paying for goods or services anywhere in the world.

The project team started developing a pilot framework to implement this initiative. Officially, the US government in 2020 did not decide to launch the digital dollar on the blockchain, because, according to the head of the FRS, “we need to figure out how this might affect the status of the American dollar”. 

One of the oldest EU banks has issued a stablecoin

German bank BVDH has issued EURB stablecoin pegged to the euro at a 1:1 ratio. The stablecoin was developed based on the Stellar blockchain in collaboration with the fintech company Bitbond. Business clients of the SatoshiPay crypto company were the first to get access to EURB.

The main purpose of EURB is to conduct cross-border payments between developers of financial applications. BVDH representatives do not exclude the possibility of using EURB to work with other banks. Due to strict restrictions from the European Commission, EURB will not be listed on crypto exchanges.

People’s Bank of China launches digital yuan

Since the beginning of 2020, the PRC has launched a large-scale digital yuan implementation (CBDC) company. Testing of the state digital currency was carried out in 4 of the largest cities in China and according to the financiers “went quite smoothly.” Until the end of October, about 4 million transactions in digital yuan were successfully completed.

JD.com was the first online marketplace to use CBDC to pay. In December, JD.com announced a digital giveaway of 20 million yuan (about $3 million) to residents of Suzhou. The excitement was ensured – 2 million applications were submitted for 50 000 places. The lottery winners received through the application the so-called “red packages” with 200 digital yuan. It is expected that by 2022 the digital yuan will be used throughout the PRC.

XRP price plummets downward

The end of 2020 was not the best time for XRP. The price of the token plummeted by more than 50% in three days as a result the news spread that the US Securities Commission (SEC) was filing a lawsuit against Ripple.

The regulator accused Ripple of illegally selling XRP tokens, which are classified as securities under US law. For allegedly fraudulent actions and misleading investors, the SEC requires Ripple to pay a fine of $1.3 billion. The reaction was immediate: some major crypto exchanges delisted and refused to trade XRP.