Bitcoin had its best month in January in 7 years. What made cryptocurrency so big in early 2020?

According to data from Coinmarketcap, the cryptocurrency started the month trading at $ 7,208, closing at $ 9,395.

1/1/2020 until 2/1/2020 – Bitcoin value chart | Coinmarketcap

With that high, bitcoin gained + 30% in just one month. Compared to historical data, this was the best January in 7 years, second only to 2013:

bitcoin price close chart in recent years in January

But what could have influenced the price of Bitcoin so positively?

While some analysts believe Bitcoin is a low-correlated asset, others believe it to be a kind of safe haven against crises.

However, cryptocurrency has been strangely correlated with crisis events. This was the case with tensions with Iran in early January and now with the coronavirus.

Instead of seeing its price drop when the crisis with Iran heated up, in a few hours bitcoin went from $ 6,597 to $ 7,339.

Another reason that may have an influence on the price is Bitcoin halving – an event that halves the issuance of cryptocurrencies. Perhaps the markets are already pricing a smaller supply of currencies on the market.

Despite speculation, the great truth is that we do not know exactly why this increase in January.

The economy is too complex to understand the motivations of each participant. To paraphrase Hayek: “I prefer true but imperfect knowledge, even if it leaves everything undetermined, to a claim of exact knowledge that is likely to be false“.

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