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US Dollar Value Measured Three Different Ways
Where Is the Dollar’s Value Headed Next?
Image by Catherine Song. © The Balance 2020
The value of the U.S. dollar is measured in three ways: exchange rates, Treasury notes, and foreign exchange reserves. The most common method is through exchange rates. You should be familiar with all three in order to understand where the dollar is headed next.
The dollar exchange rate compares its value to the currencies of other countries. It allows you to determine how much of a particular currency you can exchange for a dollar. The most popular exchange rate measurement is the U.S. Dollar Index.
These rates change every day because currencies are traded on the foreign exchange market. A currency’s forex value depends on many factors. These include central bank interest rates, the country’s debt levels, and the strength of its economy. When they are strong, so is the value of the currency. The Federal Reserve has many monetary tools that can influence the strength of the dollar. These tools are how the government can regulate exchange rates, albeit indirectly.
Most countries allow forex trading to determine the value of their currencies. They have a flexible exchange rate. The U.S. dollar rate shows the value of the dollar in comparison to the rupee, yen, Canadian dollar, and the pound.
Below, you can track the dollar’s value as measured by the euro since 2002.
This chronology explains why the dollar’s value changed.
2002-2007: The dollar fell by 40% as the U.S. debt grew by 60%. In 2002, a euro was worth $0.87 versus $1.44 in December 2007.
2008: The dollar strengthened by 22% as businesses hoarded dollars during the global financial crisis. By the year’s end, the euro was worth $1.39.
2009: The dollar fell by 20% thanks to debt fears. By December, the euro was worth $1.43.
2020: The Greek debt crisis strengthened the dollar. By the year’s end, the euro was only worth $1.32.
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2020: The dollar’s value against the euro fell by 10%. It later regained ground. As of December 30, 2020, the euro was worth $1.30.
2020: By the end of 2020, the euro was worth $1.32 as the dollar had weakened.
2020: The dollar lost value against the euro, as it appeared at first that the European Union was, at last, solving the eurozone crisis. By December, it was worth $1.38.
2020: The euro to dollar exchange rate fell to $1.21 thanks to investors fleeing the euro.
2020: The euro to dollar exchange rate fell to a low of $1.05 in March, before rising to $1.13 in May. It fell to $1.05 after the Paris attacks in November, before ending the year at $1.08.
2020: The euro rose to $1.13 on February 11 as the Dow fell into a stock market correction. It fell further to $1.11 on June 25. This happened the day after the United Kingdom voted to leave the European Union. Traders thought uncertainty surrounding the vote would weaken the European economy. Later on, the markets calmed down after realizing that Brexit would take years. It allowed the euro to rise to $1.13 in August. Not long after, the euro fell to its 2020 low of $1.04 on December 20, 2020.
2020: By May, the euro had risen to $1.09. Investors left the dollar for the euro due to allegations of connections between President Trump’s administration and Russia. By the end of the year, the euro had risen to $1.20.
2020: The euro continued its ascent. On February 15, it was $1.25. In April, the euro began weakening after President Trump initiated a trade war. The euro fell to $1.16 on June 28, a few days after the Federal Reserve raised the fed funds rate to 2%. A higher interest rate strengthens a currency because investors receive more return on their holdings. But the by end of the year, the euro was $1.15.
2020: The euro declined until May 29 when it reached $1.11. It rose briefly in June to $1.14, fell to $1.11 in July, then rose to $1.12 in August. The euro followed news about the ongoing trade war.
The dollar’s value is in sync with the demand for Treasury notes. The U.S. Department of the Treasury sells notes for a fixed interest rate and face value. Investors bid at a Treasury auction for more or less than the face value and can resell them on a secondary market. High demand means investors pay more than face value and accept a lower yield. Low demand means investors pay less than face value and receive a higher yield. A high yield means low dollar demand until the yield goes high enough to trigger renewed dollar demand.
Before April 2008, the yield on the benchmark 10-year Treasury note stayed in a range of 3.91% to 4.23%. That indicated stable dollar demand as a world currency.
2008: The 10-year Treasury note yield dropped from 3.57% to 2.93% between April 2008 and March 2009 as the dollar rose. Remember, a falling yield means a rising demand for Treasurys and dollars.
2009: The dollar fell as the yield rose from 2.15% to 3.28%.
2020: From January 1 to October 10, the dollar strengthened, as the yield fell from 3.85% to 2.41%. It then weakened due to inflation fears from the Fed’s quantitative easing 2 strategy.
2020: The dollar weakened in early spring but rebounded by the end of the year. The 10-year Treasury note yield was 3.36% in January. It rose to 3.75% in February then plummeted to 1.89% by December 30.
2020: The dollar strengthened significantly, as the yield fell in June to 1.443%. It was a 200-year low. The dollar weakened toward the end of the year, as the yield rose to 1.78%.
2020: The dollar weakened slightly, as the yield on the 10-year Treasury rose from 1.86% in January to 3.04% by December 31.
2020: The dollar strengthened through the year, as the yield on 10-year Treasury fell from 3% in January to 2.17% by year-end.
2020: The dollar strengthened in January, as the 10-year Treasury yield fell from 2.12% in January to 1.68% in February. The dollar weakened as the yield rose to 2.28% in May. It ended the year at 2.24%.
2020: The dollar strengthened as the yield fell to 1.37% on July 8, 2020. The dollar weakened as the yield rose to 2.45% at year-end.
2020: The dollar weakened as the yield hit a peak of 2.62% on March 13. The dollar grew stronger as the yield fell to 2.05% on September 7. The yield rose to 2.49 on December 20, ending the year at 2.40.
2020: The dollar continued weakening. By February 15, the yield on the 10-year note was 2.9%. Investors were worried about the return of inflation. The yield remained in this range, rising to 3.09% on May 16 then falling to 2.69% by December.
2020: The dollar weakened as the 10-year yield peaked at 2.79% on January 18. But on March 22, 2020, the yield curve inverted. The 10-year yield fell 2.44%, below the three-month yield of 2.46%. That meant investors were more worried about the U.S. economy in three months than in 10 years. When investors demand more return in the short term than in the long run, they think the economy is headed for a recession. The yield curve recovered, then inverted again in May. On August 12 the 10-year yield hit a three-year low of 1.65%. That was below the 1-year note yield of 1.75%. Although the dollar was strengthening, it was due to a flight to safety as investors rushed to Treasuries.
Foreign Currency Reserves
The dollar is held by foreign governments in their currency reserves. They wind up stockpiling dollars as they export more than they import. They receive dollars in payment. Many of these countries find that it’s in their best interest to hold on to dollars because it keeps their currency values lower. Some of the largest holders of U.S. dollars are Japan and China.
As the dollar declines, the value of their reserves also decreases. As a result, they are less willing to hold dollars in reserve. They diversify into other currencies, such as the euro, yen, or even the Chinese yuan. This reduces the demand for the dollar. It puts further downward pressure on its value.
As of the first quarter of 2020, foreign governments held $6.7 trillion in U.S. dollar reserves. That’s 61% of the total allocated reserves of $10.9 trillion. It’s down from a height of 66% held in 2020. It’s even less than the 63% held in 2008.
At the same time, the percentage of euros held in reserves was 20% in 2020. That’s less than the 27% held in 2008. All other currencies gained ground as banks diversified their foreign exchange holdings. The International Monetary Fund reports this quarterly in its COFER Table.
How the Value of the Dollar Affects the U.S. Economy
When the dollar strengthens, it makes American-made goods more expensive and less competitive compared to foreign-produced goods. This reduces U.S. exports and slows economic growth. It also leads to lower oil prices, as oil is transacted in dollars. Whenever the dollar strengthens, oil-producing countries can relax the price of oil because the profit margins in their local currency aren’t affected.
For example, the dollar is worth 3.75 Saudi riyals. Let’s say a barrel of oil is worth $100, which makes it worth 375 Saudi riyals. If the dollar strengthens by 20% against the euro, the value of the riyal, which is fixed to the dollar, has also risen by 20% against the euro. To purchase French pastries, the Saudis can now pay less than they did before the dollar became stronger. That’s why the Saudis didn’t need to limit supply as oil prices fell to $30 a barrel in 2020. The value of money affects you daily by how much commodities you can purchase with your funds at a given time. When prices for food or gas rise, your money’s value shrinks because a given amount can now buy less than what it used to.
The Value of the Dollar Over Time
The dollar’s value can also be compared to what could have been bought in the United States in the past. Today’s dollar value is much less than that of the past because of inflation.
The growing U.S. debt weighs on the back of the minds of foreign investors. In the long-term, they may continue to, little by little, move out of dollar-denominated investments. It will happen at a slow pace so that they don’t diminish the value of their existing holdings. The best protection for an individual investor is a well-diversified portfolio that includes foreign mutual funds.
Dollar Value Trends from 2002 to July 2020
From 2002 to 2020, the dollar declined. This was true with all three measures. One, investors were concerned about the growth of the U.S. debt. Foreign holders of this debt are always uneasy that the Federal Reserve would allow the dollar’s value to decline so that U.S. debt repayments would be worth less in their own currency. The Fed’s quantitative easing program monetized the debt, thereby allowing an artificial strengthening of the dollar. This was done to keep interest rates low. Once the program ended, investors grew concerned that the dollar could weaken. Two, the debt put pressure on the president and Congress to either raise taxes or slow down spending. This concern led to sequestration. It restricted spending and dampened economic growth. Investors were sent to chase higher returns in other countries.
Three, foreign investors prefer to diversify their portfolios with non-dollar denominated assets.
Between 2020 and 2020 the dollar strengthened. There were six reasons the dollar became so strong:
- Investors worried about the Greek debt crisis. It weakened demand for the euro, the world’s second choice for a global currency.
- The European Union struggled to boost economic growth through quantitative easing.
- In 2020, economic reform slowed China’s growth. It pushed investors back into the U.S. dollar.
- The dollar is a haven during any global crisis. Investors bought U.S. Treasurys to avoid risk as the world recovered unevenly from the 2008 financial crisis and recession.
- Despite reforms, both China and Japan continued to purchase dollars to control the value of their currencies. It helped them boost exports by making them cheaper.
- The Federal Reserve signaled that it would raise the fed funds rate. It did so in 2020. Forex traders took advantage of the higher rates as Europe’s interest rates declined.
Between 2020 and 2020, the dollar weakened again. In 2020, it strengthened as investors sought safety. They are growing ever-more concerned about the impact of the Trump administration’s trade war.
US Dollar Index®: What It Is and Its History
Currencies Used in the U.S. Dollar Index
The U.S. dollar index® is a measurement of the dollar’s value relative to six foreign currencies as measured by their exchange rates. Over half the index’s value is represented by the dollar’s value measured against the euro. The other five currencies include the Japanese yen, the British pound, the Canadian dollar, the Swedish krona, and the Swiss franc.
The Index Formula
The dollar index is calculated using the following formula of currency pairs:
USDX = 50.14348112 × EURUSD -0.576 × USDJPY 0.136 × GBPUSD -0.119 × USDCAD 0.091 × USDSEK 0.042 × USDCHF 0.036
The value of each currency is multiplied by its weight, which is a positive number when the U.S. dollar is the base currency. It’s a negative number when the U.S. dollar is the quote currency.
Euros and pounds are the only two currencies where the U.S. dollar is the base currency because they’re quoted in terms of the dollar. For example, a euro might be worth $1.13. The others are quoted in terms of how many units a U.S. dollar will buy. For example, a dollar might be worth 109 yen.
The Federal Reserve created the index in 1973 to keep track of the dollar’s value. This was right after President Nixon abandoned the gold standard, which allowed the value of the dollar to float freely in the world’s foreign exchange markets. Before the creation of the dollar index, the dollar was fixed at $35 per ounce of gold, and it had been that way since the 1944 Bretton Woods Agreement.
The dollar index began at 100. The index has measured the percent change in the dollar’s value since the establishment of its base value. It changes constantly in reaction to shifts in the ongoing forex trades. It’s all-time high was 163.83 on March 5, 1985. The dollar was 63.83% higher than in 1973.
Its all-time low was 71.58 on April 22, 2008, 28.42% lower than at its inception.
The ICE Futures U.S. took over management of the USDX in 1985, and futures trading on the USDX began.
This is the U.S. dollar index® historical data, as measured by the DXY for the period from 2007 through 2020:
2007: The dollar’s value, as measured by the DXY spot price, was 76.70 on Dec. 31.
2008: The dollar ended the year at 82.15 after falling to a low of 71.30 on March 17 shortly after the Bear Stearns bailout signaled damage from the subprime mortgage crisis. At that time, investors thought it only affected the U.S. and they bought euros. The Fed lowered the fed funds rate eight times. It initiated quantitative easing on Nov. 25. By the end of the year, it was clear that the 2008 financial crisis was worldwide. Investors returned to the dollar as a safe haven.
2009: The DXY ended the year at 77.92. The European Central Bank lowered rates, signaling that it was responding to the crisis. The dollar fell as investors’ confidence in the euro rose.
2020: The DXY rose to 88.26 on June 4, marking its high for the year. It fell to 78.96 by the year’s end, despite the Fed’s launch of QE 2 on Nov.3.
2020: The DXY fell to 73.10 due to the U.S. debt crisis on May 2. Investors returned to the dollar after the eurozone crisis. The Fed launched Operation Twist in September. The DXY ended the year at 80.21.
2020: The Fed announced QE3 on Sept. 13 and QE4 in December. The DXY closed at 79.77.
2020: The Fed announced on June 19 that it would taper off QE purchases. Investors sold bonds in a panic, driving the yield on the 10-year Treasury note up 1%. The Fed delayed tapering until December. The DXY closed the year at 80.04.
2020: The dollar remained stable for the first six months, hitting 80.12 on July 10. The Ukraine crisis and Greek debt crisis drove investors out of the euro and into the dollar as a safe haven. The Fed ended QE in October. It held an unprecedented $4.5 trillion in Treasury notes.
It announced that it would raise the fed funds rate in 2020. The dollar rose 15% to 91.92 by Dec. 29.
2020: The European Central Bank announced that it would begin QE in March, and the euro fell to $1.0524 on March 12. The USDX hit the year’s high of 100.18 on March 16, 2020. The dollar strengthened 25% from its 2020 low. The Fed raised its benchmark rate to 0.5% on Dec. 17, and the dollar ended the year at 98.69 on Dec. 27.
2020: The dollar fell to its 2020 low of 93.08 on April 29, then, on Dec. 14, the Fed raised the fed funds rate to 0.75%. It ended the year at 102.95 on Dec. 11. It had risen 28% since July 2020.
2020: Europe’s economy improved, strengthening the euro. Hedge funds began shorting the dollar. The Fed raised rates on March 15, June 14, and Dec. 13. The European Central Bank signaled that it might end QE in the fall on July 20. The dollar fell to 91.35, its low for that year, on Sept. 8. It ended the year at 92.12.
2020: The dollar continued its decline early in the year. The DXY fell to its low for the year of 88.59 on Feb. 15, down 14% from its 2020 high. Investors were paring back their dollar investments as Europe’s economy continued to strengthen. But then the U.S. economy improved while others’ faltered. The dollar index hit its 2020 high of 97.54 on Nov. 12 and ended the year at 96.17.
2020: The dollar rose until April 24 when it peaked at 98.20. It fell to its low for the year of 95.98 on June 24. It then rose to its high of the year of 98.52 on July 31 when the Fed lowered the fed funds rate to 2.25%.
Factors Driving Dollar’s Value
Sources: Close as of the last business day of the year. “DXY Interactive Chart,” MarketWatch. A higher number indicates a stronger dollar.
Bitcoin Price Today & History Chart
|Period||Dollar Change||Percent Change|
How Much is Bitcoin Worth Today?
Bitcoin is currently worth $ as of the time you loaded this page.
How Much was 1 Bitcoin Worth in 2009?
Bitcoin was not traded on any exchanges in 2009. Its first recorded price was in 2020. Technically, Bitcoin was worth $0 in 2009 during its very first year of existence!
How Much was 1 Bitcoin Worth in 2020?
Bitcoin’s price never topped $1 in 2020! Its highest price for the year was just $0.39!
How Much is Bitcoin Worth in Gold
You can check the Bitcoin price in gold, by clicking here.
What Determines Bitcoin’s Price?
Bitcoin’s price is measured against fiat currency, such as American Dollars (BTCUSD), Chinese Yuan (BTCCNY) or Euro (BTCEUR). Bitcoin therefore appears superficially similar to any symbol traded on foreign exchange markets.
Unlike fiat currencies however, there is no official Bitcoin price; only various averages based on price feeds from global exchanges. Bitcoin Average and CoinDesk are two such indices reporting the average price. It’s normal for Bitcoin to trade on any single exchange at a price slightly different to the average.
But discrepancies aside, what factors determine Bitcoin’s price?
Supply and Demand
The general answer to “why this price?” is “supply and demand.” Price discovery occurs at the meeting point between demand from buyers and supply of sellers. Adapting this model to Bitcoin, it’s clear that the majority of supply is controlled by early adopters and miners.
Inspired by the rarity of gold, Bitcoin was designed to have a fixed supply of 21 million coins, over half of which have already been produced.
Several early adopters were wise or fortunate enough to earn, buy or mine vast quantities of Bitcoin before it held significant value. The most famous of these is Bitcoin’s creator, Satoshi Nakomoto. Satoshi is thought to hold one million bitcoins or roughly 4.75% of the total supply (of 21 million). If Satoshi were to dump these coins on the market, the ensuing supply glut would collapse the price. The same holds true for any major holder. However, any rational individual seeking to maximise their returns would distribute their sales over time, so as to minimize price impact.
Miners currently produce around 3,600 bitcoins per day, some portion of which they sell to cover electricity and other business expenses. The daily power cost of all mining is estimated around $500,000. Dividing that total by the current BTCUSD price provides an approximation of the minimum number of bitcoins which miners supply to markets daily.
With the current mining reward of 12.5 BTC per block solution, Bitcoin supply is inflating at around 4% annually. This rate will drop sharply in 2020, when the next reward halving occurs. That Bitcoin’s price is rising despite such high inflation (and that it rose in the past when the reward was 50 BTC!) indicates extremely strong demand. Every day, buyers absorb the thousands of coins offered by miners and other sellers.
A common way to gauge demand from new entrants to the market is to monitor Google trends data (from 2020 to the present) for the search term “Bitcoin.” Such a reflection of public interest tends to correlate strongly with price. High levels of public interest may exaggerate price action; media reports of rising Bitcoin prices draw in greedy, uninformed speculators, creating a feedback loop. This typically leads to a bubble shortly followed by a crash. Bitcoin has experienced at least two such cycles and will likely experience more in future.
Drivers of Interest
Beyond the specialists initially drawn to Bitcoin as a solution to technical, economic and political problems, interest among the general public has historically been stimulated by banking blockades and fiat currency crises.
Probably the first such instance was the late 2020 WikiLeaks banking blockade, whereby VISA, MasterCard, Western Union and PayPal ceased processing donations to WikiLeaks. Following a request from Satoshi, Julian Assange refrained from accepting Bitcoin until mid-way through 2020. Nevertheless, this event shone a light on Bitcoin’s unique value as censorship resistant electronic money.
The most recent such blockade occurred when MasterCard and VISA blacklisted Backpage.com , a Craigslist-style site which lists, inter alia, adult services. Adult service providers whose livelihood depends on such advertising have no way to pay for it besides Bitcoin.
On the subject of business which banks won’t (openly) touch, there’s no avoiding mention of darknet drug markets. While the most (in)famous venue, Silk Road, was taken down, the trade of contraband for bitcoins continues unabated on the darknet. Although only 5% of British users have admitted to purchasing narcotics with Bitcoin, that figure is likely understated for reasons of legal risk. Finally, the media controversy over darknet markets has likely brought Bitcoin to the attention of many who otherwise wouldn’t have encountered it.
Fiat Currency Crises
A Bitcoin wallet can be a lot safer than a bank account. Cypriots learnt this the hard way when their savings were confiscated in early 2020. This event was reported as causing a price surge, as savers rethought the relative risks of banks versus Bitcoin.
The next domino to fall was Greece, where strict capital controls were imposed in 2020. Greeks were subjected to a daily withdrawal limit of €60. Bitcoin again demonstrated its value as money without central control.
Soon after the Greek crisis, China began to devalue the Yuan. As reported at the time, Chinese savers turned to Bitcoin to protect their accumulated wealth.
A current positive influencer of Bitcoin price, or at least perception, is the “>Argentinian situation. Argentina’s newly-elected President, Mauricio Macri, has pledged to end capital controls. This would eliminate the wide disparity between the official and black-market peso/USD exchange rates. Argentinians who can purchase bitcoins using black-market dollars will likely avoid considerable financial pain.
No discussion of Bitcoin’s price would be complete without a mention of the role market manipulation plays in adding to price volatility. At that time, Bitcoin’s all-time high above $1000 was partly driven by an automated trading algorithms, or “bots,” running on the Mt. Gox exchange. All evidence suggests that these bots were operating fraudulently under the direction of exchange operator, Mark Karpeles, bidding up the price with phantom funds.
Mt. Gox was the major Bitcoin exchange at the time and the undisputed market leader. Nowadays there are many large exchanges, so a single exchange going bad would not have such an outsize effect on price.
Major Downside Risks
It bears repeating that Bitcoin is an experimental project and as such, a highly risky asset. There are many negative influencers of price, chief among them being the legislative risk of a major government banning or strictly regulating Bitcoin businesses. The risk of the Bitcoin network forking along different development paths is also something which could undermine the price. Finally, the emergence of a credible competitor, perhaps with the backing of major (central) banks, could see Bitcoin lose market share in future.
Sometimes an exchange’s price may be entirely different from the consensus price, as occurred for a sustained period on Mt. Gox prior to its failure and recently on the Winkelvoss’ Gemini exchange.
In mid-Novermber 2020, BTCUSD hit $2200 on Gemini while trading around $330 on other exchanges. The trades were later reversed. Such events occur occasionally across exchanges, either due to human or software error.
Bitcoin is ultimately worth what people will buy and sell it for. This is often as much a matter of human psychology as economic calculation. Don’t allow your emotions to dictate your actions in the market; this is best achieved by determining a strategy and sticking to it.
If your aim is to accumulate Bitcoin, a good method is to set aside a fixed, affordable sum every month to buy bitcoins, no matter the price. Over time, this strategy (known as Dollar-cost averaging), will allow you to accumulate bitcoins at a decent average price without the stress of trying to predict the sometimes wild gyrations of Bitcoin’s price.
If You Had Purchased $100 of Bitcoin in 2020
The “Godfather of Smart Beta”, Robert Arnott, perhaps said it best, “In investing, what is comfortable is rarely profitable.” The decentralized, peer-to-peer cryptocurrency system called bitcoin puts this claim to the test. The following is how you would have fared throughout the years if you had bought $100 worth of bitcoin back in 2020.
2020: Off to a Good Start
By buying $100 in bitcoins on Jan. 1, 2020, you would have benefited from a low market value of 30 cents per bitcoin and received a total of 333.33 bitcoins for your initial purchase.
Since bitcoin traded at 6 cents for most of 2020, you would have timed your initial purchase right. In this first year, you would have had your first taste of the cryptocurrency’s high volatility. For a brief moment on June 8, 2020, bitcoin hit a high of $31.91, making the paper value of your investment a cool $10,636.56. By December 31, 2020, bitcoin was trading at $4.72, so you would have turned your $100 into $1,573.32.
How to Buy Bitcoin
2020: Steady Increase
The first day of 2020 would have welcomed you with a closing price of $5.27, bumping up your investment to $1,756.65. Throughout the first quarter of 2020, the price of bitcoin dipped below the $5 mark. It started appreciating again in May 2020 and closed at $13.51 on December 31, 2020.
Your current investment would have stood at $4,503.29. In 2020, few businesses accepted bitcoin as a form of payment. For example, bitcoin payment processor BitPay only had 1,000 businesses using its platform. One of those businesses was Utah-based Bees Brothers, so you could have purchased 450 half-pound bags of honey roasted almonds for your friends and family.
2020: The Big Ride
Unlike the previous year, 2020 would have welcomed you with a slight dip to $13.30, turning your investment into $4,433.29. Throughout most of this year, you would have been losing sleep over the security of your bitcoins. On March 18, 2020, the Financial Crimes Enforcement Network (FinCEN) issued guidelines for individuals using bitcoin in the United States, causing problems for many, including the Mt. Gox bitcoin exchange. The attacks by hackers against several bitcoin exchanges and the FBI seizure of more than 170,000 bitcoins from the criminal online portal Silk Road caused the market price to go up and down.
As the Chinese media started promoting bitcoin as an alternative currency and Baidu began accepting the cryptocurrency as payment for some services, the price of bitcoin hit an all-time high of $1,147.25. Over some exchanges, it went on to exceed $1,200 on December 4, 2020. Your paper value would have been $382,412.84. However, bitcoin did not fare well for the rest of the year, ending at $757.50 by December 31, 2020, making your investment worth $252,497.48.
The value in 2020 of $100 in Bitcoin purchased in 2020.
2020: The Big Downfall
The good news is that unlike previous years, in 2020, you could have spent your bitcoins at many companies, including Overstock.com, Microsoft, Dell and Time. Paying in bitcoins offers several advantages, including more convenience in mobile payments. Also, you could have withdrawn funds through an ever-increasing network of bitcoin ATMs around the world.
However, the bad news is you would have seen your investment drop and hit a rock bottom value of $309.87 per bitcoin on December 30, 2020. By the end of this year, your investment would have been worth $106,565.60, or 240 Tribecca Home Uptown modern sofas at Overstock.com.
2020: Ended Strong
In 2020, bitcoin showed a downward trend in price until late October, when the cryptocurrency started trading above $300 again. As of December 2020, bitcoin was trading at $413.51; at this point, your investment was worth $137,835.29. This is a 137,735.29% return on your initial $100. The amount is less than half of that all-time high so far of $382,412.84 in November 2020, but still enough to buy a home in Burlington, North Carolina, where the median home value is $125,888 (as of Jan. 31, 2020) according to real estate marketplace Zillow.com.
2020: A Nail-Biter
The bitcoin started off at $434.46 on January 1st, 2020, and had a relatively stable first quarter. Around the end of May, however, the bitcoin soared and reached $773.94 by mid-June, the highest since 2020. The steep increase was due to sudden Chinese demand, which somewhat decreased in the following weeks pushing the bitcoin back down to $638.22 at the end of the second quarter. Add the end of 2020, your investment was $257,977.42.
In February 2020, Bitcoin broke its 2020 record and hit the $1169.04 mark (per Coinbase’s price index). It hit other milestones as well, surpassing for the first time the price of one Troy ounce of gold. On November 28, 2020, it crossed the $10,000 mark and less than 24 hours later it was trading above $11,000. The price kept surging in December and hit an all-time high of $19,783 on December 17, which would have valued the investment at $6,594,267. Since then, the price has slid, trading at $10,074 on February 16, 2020, making your investment worth around $3,357,965. The price was $6,166 on June 22, 2020, making your investment worth around $2,053,278. As of February 21, 2020, the price was $3,887, making your investment worth $1,295,653.
The Bottom Line
Learn about the risks of buying bitcoin, and avoid putting all your investments in this or other cryptocurrencies. While having bought and held on to $100 in bitcoin since 2020 would have been profitable, you would have suffered a lot of stress throughout the process.
View Historical Gold Prices at the No. 1 Gold Price Site
Gold Price History
Gold Price History in Ounces USD
Gold History Charts in Ounces
Economic History Resources – What was the price of gold then?
This page features a wealth of information on historical gold prices as well as gold price charts. If you are considering an investment in gold, you may want to take a look at the metal’s price history. The chart at the top of the page allows you to view historical gold prices going back over 40 years. You can view these gold prices in varying currencies as well, seeing how it has performed over a long period of time. Depending on the currencies being used, you may find a better long term value. For example, because gold is typically denominated in U.S. Dollars, if the dollar is weaker then someone buying gold in yen or euros may find gold to be relatively less expensive. On the other hand, a stronger dollar may make gold relatively more expensive in other currencies due to exchange rates.
You can also easily examine historical gold prices on a much smaller time horizon from 10 minutes to three days to 30 days to 60 days and up. The timeframe you decide to look at may depend on your investment objectives. If you are simply looking to buy and sell gold as a swing trader, you may focus on the hourly or six hour charts. If you are looking to invest in gold for the long-term, you may be better off using longer timeframes such as weekly, monthly or yearly.
Why Look at Historical Gold Prices?
Looking at historical gold prices may potentially provide information that may assist in buying or selling decisions. Looking at the big picture, gold trended higher for many years before making all-time highs in 2020 of nearly $2000 per ounce. Gold has since been moving lower, but could have possibly found a bottom in 2020. Although it remains to be seen, gold’s declines from the 2020 highs could simply prove to be a pullback within an even longer-term uptrend.
Examining historical gold prices can potentially be useful in trying to identify potential areas of price support to buy at. For example, if gold has pulled back to $1200 per ounce on numerous occasions but is met with heavy buying interest each time, then the $1200 area could be considered a level of support and could potentially be a good area to try to buy at.
In addition to viewing historical gold price charts in U.S. Dollars, you can also view historical gold prices in numerous alternative currencies such as British Pounds, Euros or Swiss Francs. You can even view a historical inflation-adjusted gold price chart using the 1980 CPI formula.
For easy reference, this page also contains a simple table that provides gold’s price change and percentage change using a single day, 30 day, six month, one year, five year and 16 year timeframes.
What has Driven Changes in the Gold Price?
Over the past several decades, the price of gold has been influenced by many different factors. Gold’s price history has seen some significant ups and downs, and dramatic changes in price may be fueled by such issues as central bank buying, inflation, geopolitics, monetary policy equity markets and more.
One of the biggest drivers of gold is currency values. Because gold is denominated in dollars, the greenback can have a significant impact on the price of gold. A weaker dollar makes gold relatively less expensive for foreign buyers, and thus may lift prices. On the other hand, a stronger dollar makes gold relatively more expensive for foreign buyers, thus possibly depressing prices. Fiat, or paper currencies, have a tendency to lose value over time. If this continues to be the case, gold could potentially continue in an uptrend as investors look to it for its perceived safety and its potential as a hedge against declining currency values. Gold has long been considered a reliable store of wealth and value, and that reputation is not likely to change any time soon.
Although past performance is not necessarily indicative of future results, gold’s price history can potentially provide clues as to where it could be headed. Looking at past price data, for example, may help with spotting uptrends or downtrends. Investors may also potentially spot tradable patterns within the price data that can potentially lead to solid buying or selling opportunities.
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