Why this bull run is not a repeat of 2017

Do you remember the last months of 2017 in the cryptocurrency market? It was everywhere. Even the MSM started talking about it, although its journalists tended to get it all wrong. The ‘haters’ compared it to the Tulip Fever of the 1600s, and when Bitcoin crashed after reaching an ATH of $20,000, perhaps they felt vindicated.

It has taken three years for Bitcoin and the altcoins to retake their 2017 positions, and who would have guessed that it would happen at the same time as the world was mostly staying at home due to a rampaging virus. But that is what has happened, and in the last few days we have seen Bitcoin break through the $40,000 barrier to become ‘virtual gold’.

The question most cryptocurrency owners must be asking themselves is this: is this bull run the same as in 2017? Jeff Wilser has taken a look at it, starting by saying, “for some reason this bull run feels different – not as mainstream, not as talked about, not as Paris Hilton-y.” Dare I suggest this is because people are more hooked on Covid numbers right now?

As Wilser says, there are ways to measure a bull run by looking at the frequency of Google searches for ‘Bitcoin’, and expert market analyses. However, what he has done is take a qualitative approach, to see how it ‘feels’, particularly to those he calls the “OG Bitcoin HODLers.”

One example is Erik Finman, the ‘Teenage Bitcoin Millionaire’, who bought 100 Bitcoin in 2011 with money his grandmother had given him. He dropped out of school at 15 and set up a crypto payments company, Metal Pay. Oh yeah, he also launched a satellite with Taylor Swift. He has a theory about why this new cycle is going relatively unnoticed: “The cultural space that was once occupied by crypto is now gobbled up by politics (Trump) and the coronavirus pandemic.” What did I say earlier?

“[Donald] Trump gets more clicks than crypto,” says Finman. Exactly! He thinks the Biden presidency may change that. Not because he dislikes Biden, but because he believes Bitcoin may be more interesting. And, if Covid-19 becomes about as interesting as the common cold that too will make space for crypto. It’s worth noting that during the shocking scenes of rioting at the Capitol on 6th January, Bitcoin surged by 10%.

Erik Voorhees, the CEO of ShapeShift, takes another view on it. He says: “You see the bull and the bust cycles that repeat several times over the last decade, and you see that each time bitcoin “crashes” the new level is higher than the prior cycle.” So, why the quiet now? Because, “We’re not in the real bubble yet,” Voorhees claims. It needs to get more exciting before the media starts shouting.

Others, such as Jill Carlson of Slow Ventures, says that with 20% of US dollars printed in 2020, Bitcoin has become a hedge against inflation. That doesn’t have quite the same ring for retail buyers as ‘When Lambo!’

There’s less hype this time round, but surely that is a sign that the market is maturing, and those of us who have owned crypto for some time are less anxious about the inherent volatility, while still quietly excited to see where this bull run goes.

Crypto market surges as Capitol burns

Yesterday, 6th January, was a jaw-dropping day for a couple of reasons. American politics reached a new low, as Trump incited his supporters to violence, resulting in a full-scale mob assault on the Capitol building itself, shocking the rest of the world as we looked on.

But, if that was the downside of yesterday, there was also a remarkable upside: the entire cryptocurrency market cap broke through $1 trillion, as Bitcoin and Ethereum continued their upward trajectory. The saying, ‘Maybe the moon’ is not looking so far-fetched right now?

As I write, Bitcoin has tumbled over the $37,000 mark: a remarkable recovery seeing as it was at around $31,000 on Monday. As Cointelegraph reports, “Measured by market cap, the crypto asset class has virtually doubled over the past month,” and BTC and ETH have seen new ATHs. ETH in particular is looking interesting, as it cleared $1,100 for the first time in three years, and now alongside BTC, the two account for two-thirds of the market.

Of course, they are not the only cryptocurrencies seeing exceptional gains, as “dozens, if not hundreds, of cryptocurrencies, report double-digit percentage returns this past week.” However, we must acknowledge that Bitcoin retains its market dominance, and is unlikely to be surpassed in value soon, even though altcoins may make bigger percentage gains.

To reach a $1 trillion market cap is remarkable, and it came only a matter of days after the leading crypto’s passed the highs of the 2017 bull run. Back then, the combined market cap hit roughly $830 billion, according to CoinMarketCap, and we thought that was huge at the time.

It is worth keeping an eye on the smaller altcoins though, if you’re thinking of investing. As Sam Bourgi at Cointelegraph says: “Bitcoin’s bull cycles pave the way for a subsequent altcoin rally, which is often larger than the initial BTC mark-up. Dubbed ‘altseason’ by the crypto community, the parabolic rise in altcoins can happen quickly, leaving investors with little time to prepare. “

Naturally, the current sentiment for cryptocurrency in 2021 is very bullish among crypto analysts and supporters, and those of us who hold crypto will no doubt hope their views are what come to pass. Crypto has often taken us into a beautiful dream, but as those of us who have been involved with it for years know only too well, it’s an edifice that can collapse with the same shocking speed, as a so-called peaceful protestors turn into an angry mob.

Young consumers want more crypto banks

It very much looks like crypto banks are going to kill off the traditional high street bank, the ones that only deal in fiat currencies anyway. Mark Binns, writing for Cointelegraph, predicts that in less than three years, “a younger generation of banking customers won’t do business with a traditional fiat bank unless it offers access to crypto.”

Kraken, the San Francisco-based exchange, has already managed to acquire a bank charter, which means it is now able to offer its existing customers a range of banking products in addition to its cryptocurrency exchange. It is working with Silvergate Bank in the USA, to offer SWIFT and FedWire funding options, and as Binns says, we are likely to see more partnerships like this in the future, because they are offering what a new swathe of customers are asking for.

Binns points out that Silvergate appears to be ahead of the curve with this. It has 880 digital asset companies on its client list, and they have deposited in excess of $1.5 billion. Although this is small change in the banking world, it is a strong start in meeting a market that is dynamic and developing.

Binna says: “Consumers will soon define a “full service” bank as one that offers financial services in both crypto and fiat. The time to start acquiring the necessary tools of the crypto banking trade is right now. Banks need to start adapting or get left behind. Make no mistake about it.”

Making the change

If the existing banks are going to compete with crypto banks they will need some new tools to do this?

First off, they need blockchain forensics tools. There has for some time been the suspicion that a blockchain can conceal secrets. In fact, it is much easier to investigate activity on a blockchain than it is fiat currencies. It is certainly possible to uncover the origins of transactions. To do this, a bank will need “blockchain explorers and risk scoring tools.” These already exist, and enable “investigators to follow digital paper trails across addresses, wallets, transactions, blockchains and other digital entities, using techniques like clustering and heuristics.” As Binns remarks, fiat currency is still the currency type of choice for money laundering. Contrary to popular belief, it is more difficult to launder money via a blockchain.

Offering DeFi products is another area for traditional banks to consider. As Binns says, “decentralized finance sector of cryptocurrency holds virtually endless promise.” However, these are unlikely to attract the average ban customer for some time yet, although crypto enthusiasts are pretty excited about the potential of the DeFi market.

Banks need to speed up their response to cryptocurrencies or find they have to close. It isn’t a case of wait and see any more, and they should be taking action immediately, before the likes of Kraken and the other promising projects offering multicurrency accounts that combine crypto and fiat currencies overtake them. Furthermore, with Christine Lagarde, president of the European Central Bank, announcing that she expected a decision on issuing a digital Euro to come in early 2021, it is clear that digital currencies are here to stay. Those who thought crypto was a fad that would disappear are going to be very disappointed.

Is 10.5k the Bitcoin resistance point?

If you’re a Bitcoin (BTC) owner, you may have been disappointed to see it fail to stay across the $12,000 mark, and it has dropped to hover between $10,000 and $10,500 during the past week.

As Charles Bovaird says in one of his most recent posts about the Bitcoin price, “In this time, the digital currency has failed to reach $10,500, and while it has fallen below $10,000, it has failed to stay below this level for long.”

So, what does Bovaird make of what is happening, and I should say that I follow his analysis of this market, because it has always proved to offer balanced information.

What Bovaird asks is this: is BTC encountering “significant resistance” at $10,500?

According to those he interviewed, the answer to that is yes. Why is it happening?

In the opinion of Kiana Danial, CEO of Invest Diva, “Bitcoin has found a short-term resistance at $10,500 which has acted as resistance multiple times in the past, including in June 2020, February 2020, and a number of times in 2019.” She also adds, “A break above $10,500 could open doors for further gains towards $11,150, while a break below $10,000 (the lower band of the current range) could lead to a revisit of the lows of back in July at around $9,300.”

John Todaro at TradeBlock is of a similar opinion. “Yes, we are facing resistance at $10,500,” he stated, adding, “$12,000 has proven to be a difficult ceiling to break through.”

Joe DiPasquale, CEO of cryptocurrency hedge fund BitBull, commented, “Bitcoin is consolidating in this range for now with support at $10K and resistance at $10.5K.” 

He also says, that if BTC doesn’t fall beneath $10,000, then we may see a retest of $10.5k. But if it does fall, to say $9,800, then we’re likely to see $9.5k shortly after.

But not all agree that BTC is facing resistance at $10,500. Marouane Garcon, MD of crypto-to-crypto derivatives platform Amulet, said, “I would say that $10,000, which was a level of resistance, is now the support and in this obvious accumulation phase, we’re testing that support level.”

Do you have any thoughts about what might happen to the price of Bitcoin in the next few months, and what events might affect it to raise the price, or cause it to fall?