Three reasons revealed: Why did Bitcoin price record the third best quarter performance in history?

The price of Bitcoin (BTC) fell sharply on March 13, falling below $3,600, before eventually breaking through $10,000 over the next three months, posting its strongest quarter in history in the second quarter.

Skew researchers said:

“Bitcoin recorded the third-best quarterly close in its history.”

Bitcoin's quarterly performance over the past 6 years. Source: Skew

Three key catalysts drove Bitcoin’s historic rally from April to June: the May 11 block reward halving, demand for Bitcoin at multi-year lows, and a strong rebound in global stock markets.

Block Reward Halving

On May 11, the Bitcoin blockchain network experienced its third block reward halving in history. The halving cuts the rate at which Bitcoin is produced in half as the number of Bitcoins produced approaches its fixed supply of 21 million.

Immediately after the halving, miners’ revenues dropped by nearly 50% and faced pressure to cope with the decline in profits, which sparked discussions about miners’ capitulation as a result of the halving.

Despite the halving, the Bitcoin network’s hashrate remains at an all-time high. Considering that each previous halving has led to an exponential rise in Bitcoin, the strength of the hashrate is a highly relevant metric that is currently fueling optimism among traders.

Possibly due to the resilience of the mining industry, the price of Bitcoin did not experience the sharp drop after the halving that analysts had predicted.

Plunge to $3,600 Boosts Demand for Bitcoin

When the price of Bitcoin on BitMEX dropped below $3,600, demand surged on the top U.S. exchange. Many retail investors rushed to buy Bitcoin at $4,000, which led to a quick recovery to $5,800 and then $10,000.

At the end of March, Coinbase stated:

“Since the drop, Bitcoin and the broad cryptocurrency ecosystem have rallied while the stock market continues to decline (S&P down -6%, Bitcoin up +23% as of March 27). This is particularly exemplified by Coinbase’s customer buying behavior during and after the price drop.”

Bitcoin has rebounded strongly since March Source: Blockchain.com

Just a month before the Bitcoin drop, the price of Bitcoin was hovering above $10,000, with many analysts noting that the price was testing multi-year resistance at $10,500 and was approaching the start of a bull run.

Despite a more than 50% drop in the price of Bitcoin, the narrative that Bitcoin surpassing $10,500 has sparked a bull run remains attractive and has driven a surge in demand from retail investors.

Stock market rebound

The total number of coronavirus infections has increased rapidly since the end of March. As of June 30, data from worldometer showed that there have been more than 10.5 million confirmed cases.

Regardless of the impact of the coronavirus pandemic, the unprecedented liquidity injected into the market by major central banks has driven a strong V-shaped rebound in the stock market. (Cointelegraph Chinese)