I really liked this analysis:
I really like this analysis. Basically, it helped me clear up some of my own thoughts. Back in 2017, during the ICO bubble, I was back into crypto, checking things out, testing things with Ethereum etc. Of course I hope I had held some BTC from back then but that’s fine, it’s still early enough for everybody to get some Bitcoin.
Anyway, back to comparing the two bull runs. They call it the Bitcoin supercycle from this podcast:
Basically it boils down to this:
- In 2017 the trading volume was full of crypto enthusiasts, some whales for sure, but it was basically nerd money. In 2020 we have institutional accumulation of Bitcoin by “serious” investors with long-time horizons.
- During 2017 there were no DeFi, serious exchanges were small, meaning the on-ramps and off-ramps were tricky and problematic. In 2020 they were much more user-friendly.
- This is my favourite, and I believe it’s absolutely true: In 2017 the narrative was different. Bitcoin wanted to be the digital monetary system to envelop the planet. It wanted to be Visa, Mastercard, Paypal, everything. The hard forks during that time divided a lot of good bitcoiners into various camps and split people’s attention. It’s one thing for a newcomer to grasp bitcoin, imagine them showing up in the various crypto communities and see an upheaval of people screaming that their version of Bitcoin is the best one. Now that the various forks like Bitcoin Cash and Bitcoin Satoshi Vision are dead, and they are dead, we can focus on the first bitcoin which is the one that matters. In short, now the narrative has shifted to Bitcoin being not a currency, but digital gold. And that makes a hell of a difference.
- Bitcoin has Wall Street support and banking regulator approval this time around. Fears of a government ban are unfounded.
- This is another point that bugged me. Back in 2017 I didn’t want to buy crypto and HODL. Well, I did, but I needed money to live, so I couldn’t tie them up in some nerd fantasy of smart money as it seemed at that time. And there were no options for cashflow other that just selling Bitcoin when it rose in price. In 2020 we have all these DeFi options, staking, yields, plain interest returns on exchanges like BlockFi and YouHodler, and it’s just a whole different cryptosphere. This causes less selling pressure for 2020 and for the future.
- The macroeconomics are different. Basically, this is the argument that I heard the founder of RSK make in Venezuela: In first-world countries with “stable” currencies people see no need for bitcoin. It’s just another electronic payment system to them. Now that the macroeconomics have changed, the Federal Bank is printing dollars like crazy and the pandemic has ruined economies around the world, people are seeing the benefits that only third-world countries with unstable inflationary currencies could see back then. It’s a whole different arena this time.
The takeaway from all this is that we’ll probably see insanely All-Time-Highs for Bitcoin from now on, and the inevitable bear market will only see pullbacks around 10-20% instead of the sphincter-clenching 80-90% of the past.