The 2017 cryptocurrency bull market will go down in history as one of the most remarkable and extraordinary events in financial markets.
It saw Bitcoin rise to $20,000, Ethereum to $1,420 and a plethora of newly-launched ICO projects experience gains of up to 3,000%.
More than two years later, Bitcoin has failed to breach its previous all-time high while the likes of Ethereum continue to trade 80% lower than it once was.
However, 2020 has caused a newfound sense of optimism across the industry, which has been highlighted by a dramatic rise in prices across the board in the first six weeks of the year.
With a number of altcoins right on the brink of a major breakout, it does seem as though a bull market is currently in effect for the cryptocurrency sector.
Whether it has become a safe haven amidst economic uncertainty due to the coronavirus, or simply a move to anticipate leading up to Bitcoin’s halving, the overall level of cryptocurrency sentiment is brewing towards euphoria.
Bitcoin halving
In May, Bitcoin will undergo a third ‘halving’ in its 10-year history, which will see block rewards for miners slashed from 12.5BTC to 6.25BTC per block.
The theory is that the mining industry will be more incentivised to hold onto the extra coins mined until the halving, thus drying up supply.
When the supply is reduced, the price naturally begins to rise which, in turn, causes a new wave of demand from both new and old investors.
The previous two halvings – in 2012 and 2016 – both came before a series of bull markets that saw Bitcoin surge to two consecutive all-time highs with altcoins eventually following.
Coronavirus
Global markets have experienced a decline since the turn of the year as concerns begin to mount in regards to the coronavirus outbreak in China.
Companies have begun removing foreign workers from Chinese offices and factories in light of recent concerns, which is expected to hit the world’s second largest economy hard over the coming months.
As uncertainty reigns over the far eastern manufacturing hub, traders and investors are beginning to fear a global bear market, which naturally causes people to turn towards traditional hedges like gold and Bitcoin.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.