Bitcoin is faring very well during the pandemic, up 94% since March 16, when the U.S. first began widespread school closures and stay-at-home orders. During the same period, the Dow Jones Industrial Average is up 22% and the S&P 500 up 24%.
That’s a very different story for bitcoin than the beginning of March, when crypto fell precipitously, along with stocks, from negative headlines about coronavirus cases, before U.S. quarantine began. On March 13, bitcoin fell 25% in 24 hours.
The recent surge can’t all be attributed to the third bitcoin halving on May 11, an event every four years when the reward for mining bitcoins gets cut in half in order to limit the creation of new bitcoin. The price was already on a ride prior to the halving, up 80% between March 16 and May 11. Now it’s up just another 10% since the halving.
Bitcoin flag-wavers see the price action as proof that bitcoin is what they say it is: a store of value, and a hedge against uncertainty. This is certainly a time of uncertainty, with U.S. unemployment spiking amid a global pandemic, publicly traded companies withdrawing their 2020 guidance, and the Federal Reserve taking a range of measures to boost the economy.
“There is now a pretty widely held belief amongst our investors that bitcoin has solidified its place as digital gold,” says Grayscale managing director Michael Sonnenshein. “As things have become increasingly uncertain and we’ve seen levers get pulled by central banks and governments, investors have allocated to bitcoin. When the shelter-in-place began and everything was getting deleveraged, stocks were getting sold, gold getting sold, bitcoin getting sold... now bitcoin has rebounded like crazy. That’s bitcoin demonstrating its resilience as an investment.”
Daily bitcoin trading volume on 10 leading exchanges (including Coinbase and Gemini) has hit an average $2.5 billion per day, the highest trading volume level since July 2018, according to Decrypt.
And there’s additional anecdotal evidence of a general spike in interest: bitcoin shopping rewards app Lolli says it had more new user signups in the first two weeks of May than it’s ever had in two weeks, since launching in 2018; and Google searches for bitcoin have doubled since one year ago.
Daniel Roberts is an editor-at-large at Yahoo Finance and closely covers bitcoin and blockchain. Follow him on Twitter at @readDanwrite.