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Why Bitcoin’s Price Rally Today Might Not Be The Same As The 2017 Bull Run

All the way back in November 2019, AAX published its projections for Bitcoin in anticipation of the Halvening coming up in just a few months from then.

As a reminder, when Bitcoin was created, it was determined that the coin should be ‘created’ as a reward for miners who maintain the blockchain and verify transactions. With the passing of time, in anticipation of rising demand and value, these rewards become less – roughly every four years, newly minted Bitcoin distributed to successful miners is cut in half.

Learn more about the Halvening here.

Historically, this has led to significant price appreciation in the months following the Halvening, and now we once again find ourselves in such a moment.

However, compared to the last time this happened in 2017, it seems this time things may play out differently. In December 2017, Bitcoin was all the hype. The price of Bitcoin surged to nearly $20,000 USD, but when panic set in, the market turned bearish triggering a cold and uncertain crypto winter.

Now, half a year after the latest Halvening, and despite the market crash back in March and the ongoing uncertainty regarding the pandemic, Bitcoin is back above $18,000 USD and is widely expected to chart new highs.

What’s different this time?

One of the main drivers of Bitcoin’s current surge is the participation of heavy capital institutional investors such as Paul Tudor Jones and Square, and also recent announcement around PayPal’s support for Bitcoin. This has been in the making for quite some time now, as more institutional-minded exchange operators, custody providers and other financial players have been getting into the crypto space.

It is significant, not only because of gives Bitcoin more legitimacy as an asset, but also because it means we can expect more capital to flow in the market, potentially driving the price up and bringing more stability.

However, as we saw during the Black Swan event of March, institutional investors are no less prone to sell their Bitcoin during extreme market conditions than retail investors are and so this in itself may not be a strong enough reason to accept that today’s surge is significantly different or that this is not just another short-lived hype.

According to research by Chainalysis there are more factors at play. Among them is the notion that Bitcoin is indeed becoming increasingly scarce – at least, as a tradeable asset.

While the amount of liquid Bitcoin is the same as it was during the 2017 bull run, the amount held in illiquid wallets (HODLers) is much higher – nearly 77% of the 14.8 million Bitcoin mined (which has not been categorized as lost). This leaves only 3.4 million Bitcoin available to buyers, while demand keeps increasing.

It seems Bitcoin is behaving as expected. In the wake of the economic hit the world took during the pandemic, rising geo-political tensions, fear of inflation and increased mistrust in public institutions, Bitcoin seems to be emerging as a currency of ‘the people’, freely tradeable without the need for banks, government or middlemen.

Of course, when we look at the actual industry infrastructure that has emerged since Bitcoin’s creation, we see many points on integration around regulation and fiat on and off ramps, but still, and essentially, it seems Bitcoin is indeed solidifying its reputation as a safe haven asset.  

How to buy Bitcoin

AAX offers a variety of ways to buy and sell Bitcoin.

First, once you’ve registered with AAX and verified your account, you can head over to the Fast Buy section, where you can purchase Bitcoin with more than 20 different fiat currencies and pay by credit card.

You can also make use of AAX’s OTC platform, where you can buy and sell Bitcoin in exchange for a variety of fiat currencies including HKD directly from certified merchants in a safe and secure manner.

Once you hold Bitcoin in your AAX wallet, you can then opt to place your funds in the Vault where you can earn an interest on your Bitcoin. You can also trade your Bitcoin against other cryptocurrencies or even use your Bitcoin as collateral to trade futures.

Learn more about buying Bitcoin here, open an account with AAX, or download the app, and experience the next generation crypto exchange.

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