How is this Bitcoin bull market different from the one in 2017?

As the market enters a new bull market cycle, many people are beginning to worry that Bitcoin will repeat the path it took at the end of 2017.

On November 24, Bitcoin broke through $190 million for the first time in nearly three years. In the next three days, Bitcoin plummeted by 3,000 points, a drop of more than 15%. When everyone thought that the market would have the same fate as in 2017, Bitcoin slowly rose to $18,500. It can be said that apart from the similarities in price movements, the situation in this wave in 2020 is completely different from the past.

Looking back at the wave of market conditions in 2017, it is actually very ironic. The market sentiment at that time did not look like the beginning of a bull market: it had just experienced the impact of the "September 4th", the trading volume plummeted, and the market atmosphere was depressed. Immediately afterwards, several Bitcoin ETFs were rejected by the US SEC. Few people could have predicted that the bull market would be born under such circumstances.

At the time, Bitcoin completely ignored this pessimism, breaking through key price milestones time and time again, until the end of November 2017, when Bitcoin broke through $10,000, a 950% increase from the beginning of the year. With the entry of the first regulated bitcoin futures product, the Chicago Mercantile Exchange (CME), it eventually led to a vertical jump in bitcoin prices to $20,000.

Head of OKCoin market development: June 2 Bitcoin crash was the result of simple trading activities: Jinse Finance reported that OKCoin market development head Matthew Ficke said that on June 2, Bitcoin plummeted by more than $1,000 on some exchanges is the result of simple trading activity. Ficke noted that the $10,400 price level has historically been an important area. Bitcoin has entered this zone three times since the fall of 2019, unable to break out of it with significant staying power. Regarding the Bitcoin plunge on June 2, Ficke explained that it is likely that a short-term liquidation was triggered nearby. Active traders typically manage risk by setting stops around here, he said. Long positions can quickly become vulnerable unless momentum drives the market higher. This dynamic can exacerbate short-term price volatility. Additionally, he said, given the current uncertainty about the U.S. economy and the general public, Bitcoin’s recent gains make sense. [2020/6/3]

The mainstream media played a big role at the time, taking advantage of people's curiosity about Bitcoin and constantly broadcasting the status of Bitcoin for new investors who had no understanding of the risks. As a result, after Bitcoin hit its all-time high of $20,000, those media outlets disappeared — leaving only overwhelmed retail investors.

Voice | Researcher: Bakkt’s Bitcoin futures trading volume in the first month is expected to reach 25% of that of CME Group: Mati Greenspan, a senior market analyst at eToro, launched a survey campaign on Twitter, asking people what they think of the launch of Bakkt’s Bitcoin futures contract product How much will be the transaction volume in the first month after that? Ryan Todd, a researcher at The Block, replied that it could reach a quarter of CME Group's trading volume. [2019/8/17]

Looking at 2020 again, the price of Bitcoin has risen by 150% so far, from $7,100 in January to more than $18,000. This time, its rise wasn't built on a media-fueled speculative frenzy.

Bloomberg has tracked the relationship between "Bitcoin price and news coverage volume". It can be seen intuitively in the figure below that in 2017, the media coverage volume was positively correlated with the Bitcoin price, and this year the market has soared. The media reporting on Bitcoin But "disappeared".

Voice | CME Exec: Don't Blame Bitcoin Futures for the Bear Market: Tim McElroy, Managing Director and Global Head of Equity Products & Alternatives at CME Group, during a session on the crypto derivatives trading panel at CoinDesk's Singapore Consensus 2018 event Court said that bitcoin futures should not be blamed for the price crash in the crypto market this year. [2018/9/19]

Orange line: Bitcoin price, White line: Number of times Bitcoin was reported

Google Trends can also prove the fact that the number of new retail investors has decreased. Compared with 2017, the search-zce trend of the word "Bitcoin" is much flatter. That means new retail investors aren't catching on to the bull market, or they don't care at all - leading to less "dumb money" in their portfolios and a potentially longer-lasting rally.

CBOE completes software update Futures products for cryptocurrencies other than Bitcoin are about to be realized: According to a statement released on Tuesday, CBOE, which launched Bitcoin futures in December, completed a technical upgrade over the weekend. Previously, CBOE President Chris Concannon said on January 17 that while it makes sense to introduce derivatives to other cryptocurrencies, the CBOE will not act until its software is overhauled. Concannon did not specify which cryptocurrencies have matured and received CBOE attention. Enhancements in this software update from CBOE include reducing delays, or the speed at which traders complete orders, by more than 80%. Shorter trading hours are especially attractive to market makers (often referred to as high-frequency traders), who facilitate the majority of buying and selling on modern exchanges. Could help them provide more liquidity, possibly making the bitcoin price more efficient. [2018/2/28]

Changes in Google Search Trends for the Term "Bitcoin" Since 2015

In fact, the difference between the bull market in 2020 and 2017 can also be seen from the degree of FOMO. At that time in 2017, investors all over the world were in the FOMO mood, which caused Bitcoin to rise and block all the way. But this time, there is no congestion in Bitcoin, and the sentiment of investors is more "calm".

There are indications that this wave of Bitcoin’s rise is driven by the recognition of Bitcoin by companies and institutions.

In order to alleviate the impact of the Yi sentiment on the economy, countries had to start quantitative easing policies, which also caused many institutions to quickly abandon their love for traditional markets and turn their attention to investment products such as Bitcoin. MicroStrategy, a Nasdaq-listed company, and Square, a payment company, both announced their purchases of Bitcoin this year.

According to data from bitcointreasuries.org, so far, 23 companies around the world publicly hold a total of 840,000 bitcoins, accounting for about 4% of the total bitcoin.

For the companies on this list, Bitcoin's deflationary mechanism makes it an attractive hedge against the various macro risks facing the business.

Various data show that the fundamentals of Bitcoin have also risen sharply.

According to data from Coinmetrics, the number of active-zce Bitcoin addresses containing more than $10 exceeded 2017, suggesting that after a two-year bear market, retail investor enthusiasm is gradually returning to new highs.

At the same time, there are more than 2,000 addresses holding 1,000 bitcoins. The last time this data appeared was in 2016-bitcoins were continuously gathered until the bull market in 2017, when a large number of retail investors entered the market, breaking the concentration of wealth.

Another important indicator comes from Grayscale, which currently holds more than 500,000 bitcoins, accounting for 2.7% of the total bitcoin. This is a positive sign, as its rising Bitcoin holdings represent increasing institutional involvement, which will fuel the price of the coin.

In addition, open interest in Bitcoin futures contracts is approaching CME (Chicago Mercantile Exchange) all-time highs. Rising interest in the CME as a regulated entity primarily used by institutional investors bodes well for the future of Bitcoin.

The most unnegligible point is that the global payment giant Paypal decided to enter the cryptocurrency, although there are "flaws" of one kind or another (such as not providing users with private keys), this will not reduce its impact on the entire cryptocurrency market .

In the coming 2021, Paypal will launch bitcoin buying and selling services to 325 million users. Once a large number of new investors enter the market, the market situation will be completely different from the past.

In 2020, the storytelling direction of the Bitcoin market is quietly changing. People are no longer bragging about how it makes people rich, but instead turning to "insurance", "risk hedging", and "value storage". For the grand vision of Bitcoin, this transformation may only be the beginning.

Original text: bitcoinreserve Compilation: Grain

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