One Year Since the Corona Crash: Bitcoin is Now 15x ROI
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.
REEF Finance Receives $20 Million Investment from Alameda Research
Alameda Research, founded back in 2017, is one of the leading research and trading firms in the cryptocurrency industry. The company has announced a $20 million investment in the cross-chain DeFi operating system Reef Finance.
Alameda Research has invested $20 million in the popular DeFi cross-chain operating system REEF Finance.
According to a press release shared with CryptoPotato, the company has made the investment by buying REEF tokens, and in doing so, it has become a significant stakeholder in the REEF ecosystem.
This will also see the formation of strategic cooperation, which could open doors for the protocol to engage with further partners of Alameda Research in the near future.
Speaking on the matter was Denko Mancheski, CEO of REEF Finance, who said:
As our company expands into the next stage of growth, I am delighted to welcome Alameda Research to the Reef Finance budding ecosystem. We’re excited to incorporate this investment to further our trajectory and for the develompent of the Reef chain for DeFi applications of the future.”
On the other hand, through the latest investment, Alameda Research furthers its involvement in cross-chain liquidity within the industry. This would allow it to implement more integrations with Serum and Raydium on the Solana network.
It’s also worth noting that REEF is by far the first cross-chain DeFi operating system that’s built on Polkadot.
CZ Binance: CFTC’s Probe into Binance US is FUD
The world’s leading crypto exchange, Binance, is purportedly being investigated by the US Commodity Futures Trading Commission for allowing residents to trade derivatives without the necessary registration. Although Binance CEO CZ called the development “FUD,” the crypto market reacted with a sudden price drop.
Citing people familiar with the matter, Bloomberg reported the CFTC had begun an investigation aiming to determine if Binance has violated any US rules. More specifically, the Commission seeks to find out if the exchange allows US citizens to buy and sell crypto derivatives without being registered with the organization.
Nevertheless, the coverage reassured that Binance hadn’t been accused of misconduct yet, and the investigation might not lead to enforcement action.
As previously established, the CFTC considers some cryptocurrency assets, such as Bitcoin and Ethereum, as commodities and has claimed jurisdiction over their futures and other derivatives options.
A Binance spokesman noted that the exchange will take a “collaborative approach in working with regulators around the world, and we take our compliance obligations very seriously.”
The company’s CEO, Changpeng Zhao, indirectly commented on the development, saying that “it’s not a bull market without some FUD,” and urged his followers to ignore it. FUD is a popular term, especially in the crypto space, meaning – fear, uncertainty, and doubt.
Shortly after the news broke, bitcoin, and most alternative coins, dumped in value. The primary cryptocurrency lost over $1,500 from $56,500 to about $55,000. As of writing these lines, the asset has bounced off and sits above $55,500.
Somewhat expectedly, Binance’s native cryptocurrency had it even worse. BNB dropped by 10% from $275 to $250 in a matter of minutes. Similarly to BTC, though, it has reacted positively following the nosedive and currently trades at $265.
SEC Requests Personal Financial Information on Ripple Executives, They Object
More developments on the Ripple vs. the SEC legal front as the Commission has requested personal financial information of the company’s CEO, Brad Garlinghouse, and co-founder Christian Larsen.
Simultaneously, the Japanese financial giant SBI Group has doubled-down on its support for Ripple by offering to pay its shareholders dividends in XRP.
The SEC Seeks Personal Info on Ripple Execs
The impending case between the US Securities and Exchange Commission and the blockchain payment processor Ripple has become more personal for two of the executives representing the company.
Bloomberg reported earlier that the Commission had sent subpoenas to at least six banks requesting personal financial information for Garlinghouse and Larsen dating eight years back.
However, Ripple’s executives have fought against the SEC’s attempt by filing a motion with a federal judge. Garlinghouse and Larsen have doubled-down on a previous assertion, saying that this request from the Commission is a “wholly inappropriate approach.”
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Both claimed that they had agreed to provide all necessary records relating to XRP transactions and information about other compensations from the company. However, they believe that there’s no allegation that their personal finances were somewhat connected with the firm’s.
“The SEC has not offered and cannot provide a coherent explanation for why it is entitled to this information,” said lawyers representing Garlinghouse and Larsen.
As it became known at the end of 2020, the SEC brought charges against Ripple alleging that the payment processor had conducted a $1.3 billion unregistered security offering.
The lawsuit brought severe consequences for Ripple. Most recently, the company announced the ending of a partnership with the international money transfer provider – MoneyGram. Shortly after, Ripple filed documents with the SEC showing that it plans to dump its entire stack of 8.2 million MoneyGram shares.
SBI Group Enhances XRP Support
While regulators in the US are attempting to prove that XRP is a security and has to bear the consequences for it, other countries, such as Japan, have been openly more supportive of Ripple.
One of the largest Japanese organizations, SBI Group, said last year that XRP is a “cryptocurrency asset” and not security by local laws. Later, the entity set up a crypto lending service platform and enabled XRP deposits as well.
Earlier today, SBI Group reaffirmed its support by saying that shareholders will be able to receive their dividends in Ripple’s native token. Those who hold at least 100 stocks could receive 2,500 yen (roughly $25) worth of XRP.