- The March 2020 COVID-19 crash sparked a 50% plunge in Bitcoin’s price, marking the start of a volatile period of price discovery.
- US government stimulus checks provided a lifeline for Americans, with those who invested the $1,200 into Bitcoin making a fortuitous decision as it is now worth over $12,000.
- The crash marked a shift in investor behavior, with exchange balances declining as investors withdrew Bitcoin into private wallets, illustrating growing long-term conviction.
Four years ago, the COVID-19 pandemic sparked a global economic crisis and crypto market crash that proved to be a pivotal moment for Bitcoin. While devastating at the time, the March 2020 crash ultimately fueled Bitcoin’s meteoric rise over the long-term.
The COVID-19 Crash Sends Bitcoin Tumbling
On March 12, 2020, as coronavirus fears gripped the world, Bitcoin’s price began to plunge. Over two days of intense selling pressure, BTC crashed from $7,960 down to a low of $3,860 – a drop of over 50%. The crash was part of a broader market rout across stocks and other risk assets as the economic implications of COVID-19 lockdowns became clear. For Bitcoin, it marked the start of a volatile period of price discovery.
Stimulus Checks Provide Fuel for Bitcoin’s Recovery
The US government provided a lifeline for many Americans in the form of $1,200 stimulus checks in April 2020. Those who invested their stimulus funds into Bitcoin made a fortuitous decision. According to data from BitcoinStimulus.com, $1,200 invested in BTC during the crash is now worth $12,930. For those who went “all in” on stimulus checks, turning the full $3,200 into Bitcoin, their stack is now worth over $40,000.
Exchange Balances Decline as Investors Withdraw Bitcoin
The March 2020 crash marked a definitive shift in investor behavior regarding Bitcoin. According to on-chain analytics firm Glassnode, the total balance of BTC held on exchanges peaked in March 2020 right as the crash occurred. Since then, the exchange balance has been on a steady downtrend as investors withdrew their coins into private wallets. The mass exodus of BTC from exchanges illustrates growing conviction in Bitcoin’s long-term viability.
Conclusion
In retrospect, the COVID-19 crash marked a paradigm shift for Bitcoin. Stimulus check investments, coupled with the mass withdrawal of BTC from exchanges, provided the fuel for Bitcoin’s meteoric rise over the following years. For those who bought the dip, the crash proved to be a once-in-a-lifetime buying opportunity.
