Cryptocurrencies have become the best performing asset of 2020.
According to Bloomberg, this “decentralized financial instrument” became the number one asset of the year, driven mainly by Ethereum.
In 2020, the Bloomberg Galaxy Cryptocurrency Index – an index designed to measure the performance of the largest cryptocurrencies traded in USD – rose by about 65%.
Thus, exceeding the 20% increase in the price of gold and the returns of the global stock market.
In addition, crypto assets outperformed the bond market and the commodities market.
According to Bloomberg, one of the main reasons for market gains is the surge in Ethereum.
That's because Ethereum accounts for more than a third of Bloomberg's cryptocurrency index. Therefore, the appreciation drove the index upwards.
Bloomberg Information Research strategist Mike McGron said that increased use of decentralized financial tools (DeFi) has caused the price of Ethereum to rise.
According to him, Ethereum "seems to maintain its leadership position as a platform in the field of cryptography".
With the help of DeFi tools, people can borrow and earn interest just like in a savings account. On the other hand, they eliminate the need for traditional intermediaries such as banks.
In this sense, crypto advocates believe that cryptocurrencies also offer an option for preserving value.
Economic stimuli in the Covid-19 scenario
Currently, the market is particularly concerned that the huge stimuli in response to the coronavirus epidemic will increase inflation and weaken the dollar.
Mark Fleury, chief executive of the cryptocurrency and financial technology asset management company, twoPrime, said the cryptocurrency market performed well during the Covid-19 crisis.
According to him, this is partly because when the risks multiplied, cryptocurrencies became “safe havens” like gold.
“When the real economy stagnates, a purely nihilistic tool performs well. This is the case with Bitcoin, ”he said.
Also read: Trader predicts Bitcoin to R $ 300 thousand in 2021 and raises controversy
Read also: “Everyone will use China's digital currency,” says legendary Bitcoin miner
Read also: Check out the five crypto assets that were most valued during the week