Why Bitcoin is Decreasing in 2020 (Why Bitcoin is Falling)

Why is Bitcoin decreasing in 2020? Editor’s note: This article is from Hellobtc (ID: hellobtc) and is written by Yangshu. Authorized reprint from Odaily Planet Daily.

2020 is a very important year for Bitcoin. However, with the deterioration of the global economy and the recession in the United States, the digital currency market in 2019 experienced a major adjustment. So why did this phenomenon occur under such circumstances? Here are some reasons:

1. The pandemic has a huge impact on the traditional financial system;

2. Central banks of various countries are injecting liquidity to stimulate economic development;

3. Bitcoin prices continue to decline. In late 2020, the entire cryptocurrency market experienced a major adjustment. The downward trend from the beginning of the year to the present does not exceed one month. During this period, a large amount of funds poured into this industry for arbitrage and speculation, causing investors to constantly search for new lows and wait for profit-taking. When people start to pay attention to the current market conditions, they often find that Bitcoin has already fallen to the bottom. Although many people know that this year is a bull market, some people have overlooked certain trends. 1. Analysis of Bitcoin price trends: Due to the fact that the market is currently at a very critical point in time, many analysts believe that the price of Bitcoin is indeed sliding, and some experts even predict that it may continue to rise.

Let’s first review the most important event in 2019-the impact of the COVID-19 pandemic. According to Bloomberg, the novel coronavirus has greatly reduced the legal deposits of many countries to zero or close to zero US dollars, and further pushed gold prices up, eventually leading to a surge in gold prices. 2. Bitcoin price trend and fundamental analysis: According to data provided by Glassnode, it can be seen that the current supply of the Bitcoin market is rapidly decreasing, and there is also an obvious rebound pattern. Because in the past two months, the price of Bitcoin has been slowly rising, although there has been no movement or changes in the past few days, this trend has been maintained consistently.

The chart above shows the ratio of Bitcoin prices to its circulation over the past few months. It can be seen that if the price of Bitcoin can rise higher, it means that people are increasingly recognizing BTC’s ability as an asset category. In addition, the price fluctuations of Bitcoin will also be affected by other macro forces. For example, in the first quarter of 2018, the trading price of Bitcoin was about $50,000 or more. Since the end of 2019, the price of Bitcoin has dropped to around $3,000. However, at the end of the third quarter of this year, the price of Bitcoin suddenly plummeted to the range of $5,000-6,000 and quickly returned to a parallel state. It is worth noting that since mid-September, the price of BTC has been steadily rising and has broken the historical high of 60,000 USDT. In the next few weeks, BTC may once again experience a major correction for the first time since 2015. 3. Summary of Bitcoin’s ecosystem development: According to the growth of Bitcoin’s ecosystem, it can be seen that the total number of active users in the Bitcoin network is about twice that of Ethereum.

Why is Bitcoin falling?

According to cryptobriefing, according to the latest report released by the encryption analysis company Messari, the price of Bitcoin has fallen by more than 20% from its high in mid-April. According to the report, BTC’s price has fallen by about 60% since March. Although there have been some signs of rebound and pullback in the past week, compared with other assets, Bitcoin seems unaffected. The first is the change in market sentiment, which may lead to loss of confidence in future market trends; the second is that after the recent surge in Bitcoin, many exchanges have closed, users have been forced to liquidate positions, and other events have caused panic selling in the market, making it difficult for many people to enter the market and causing everyone to start thinking about what will happen next, because this situation is very common.