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A sudden rise in the price of bitcoin has made the cryptocurrency to become the highest performing asset of 2020, outperforming gold, silver and oil.
In the last four months, the bitcoin price has increased almost a third, despite the market crash in March, which removed more than $ 4,000 of its value. In this same period, gold increased about 13%, while silver fell by 14% and the value of oil decreased more than 70%.
Bitcoin’s recovery happens less than two weeks from a rare event known as halving, where The number of new bitcoins created will be reduced by 50%. This is just the third time halving has occurred in Bitcoin’s 11-year history, and some market analysts believe it could push the cryptocurrency’s price to new all-time highs this year.
Both Bitcoin and gold have seen significant gains since mid-March, when countries around the world began announcing containment measures in an effort to stem the spread of the coronavirus outbreak.
This resulted in a global economic slowdown and caused the stock markets to crash as investors sought to secure their money in safe haven assets.
This has been the reason why gold has traditionally performed well during times of economic uncertainty, however, market data indicates, that the finite supply of bitcoin is increasingly being considered as a haven asset.
Joshua Mahony, market analyst at financial services firm IG, told local media:
Bitcoin has exploded ahead of the halving event in mid-May, with investors eagerly anticipating the positive impact of an adjustment that comes once every four years.
As things stand, we are about to register a 182% rise for bitcoin from the December 2018 lows, and the increase we are currently seeing shows us a bull market for the following months of this third halving. From a broader point of view, the huge growth in calm of the central bank and government debt highlights why many feel the need to store their money in alternative assets to avoid the apparent depreciation that can be seen.
Some other cryptocurrencies have performed even better than Bitcoin, like Ethereum’s crypto ether, seeing gains of over 60% since the start of the year.
Despite recent gains, bitcoin and ethereum are still a long way from the all-time highs reached in late 2017 and early 2018, when bitcoin was worth more than double its current value.
Translated version of Anthony Cuthbertson’s article published in Independent.
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