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.

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1. How is it different from 2017?

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.

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.

Looking at 2020 again, the price of Bitcoin has risen by 260% so far, from $7,100 in January to more than $19,000. This time, its rise wasn't built on a media-fueled speculative frenzy.

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(orange line: bitcoin price, white line: number of times bitcoin was reported)

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(Google search trends for the term "Bitcoin" since 2015)

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2. Institutions, not individual investors

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.

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3. Fundamentals of continuous improvement

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

According to data from Coinmetrics, the number of active 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 .

epilogue

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.