Why ‘Black Friday’ Was The Best Thing To Happen Bitcoin In 2020
March 12, 2020, will go down in history books as Black Thursday. That day began a two-day, more than 50% collapse in Bitcoin. It also shook the stock market, precious metals, and crypto.
But yet, that fateful day in hindsight was the best thing to happen to Bitcoin all year and was a crucial factor in the asset achieving a new all-time high and trading near $30,000 currently. Here are all the reasons why.
Remembering The Onset Of Pandemic Panic In Early 2020
2020 started off roaring as investors had hoped, with the stock market setting new all-time highs and Bitcoin trading above $10,000. But within the first quarter of the year, the entire world changed due to the emergence of the pandemic.
Anyone who was watching Bitcoin price charts on March 12, 2020, at the time had for the first time considered the cryptocurrency to be at serious risk.
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The panic-selling and cascade of stop-losses being hit as investors cashed out fearing the coming impact on the economy, took Bitcoin back to $3,800.
But the catastrophic moment now marks the greatest historic example of contrarian investing ever and is largely responsible for Bitcoin setting a new all-time high in the same year.
Black Thursday is just a distant memory in terms of price action at this point, but its impact remains | Source: BTCUSD on TradingView.com
Why Black Thursday Was The Big Bitcoin Moment Of Truth
Capitulation cleanses markets of any remaining weak hands, and the shakeout from $10,000 to $3,800 did just that. It also instilled fear in derivatives traders on BitMEX – the then-market leader – enough to get them to stop risking liquidation of their BTC. The exchange has since fallen out of grace.
The price action also did two other things: it brought Bitcoin to an extremely attractive price point for newcomers, and at the same time confirmed the highest timeframe resistance turned support and that the bear market bottom was in.
To save the stock market and global economy at the same time, governments printed fiat money supply and issued various forms of stimulus. The efforts could drastically increase inflation over the next few decades, leaving investors scrambling for an asset with an upside.
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That asset has historically been Bitcoin and will continue to be due to its extremely limited supply and incredible long-term potential. Now that institutions are recognizing this, and at the same time see that upside in other markets is capped, the cryptocurrency could not possibly be more attractive.
The rise in demand is reflected in the recent price increase and only further amplified by the impact of a recently halved supply. Without Black Thursday, the perfect storm for Bitcoin might not have arrived.
Now that it’s here, it’s forecasted to take over the world of finance.
Featured image from Deposit Photos, Charts from TradingView.com
OhNoCryptocurrency via https://www.ohnocrypto.com/ @Tony Spilotro, @Khareem Sudlow