As we approach ATH what is different compared to 2017?

[DougM]

We are likely to test the ATH of $ 19783 soon I found myself asking what is different than before.  In short, a lot, but I would like to hear other thoughts.  'Chainalysis Team' published this report that has some interesting prospective I haven't considered/realized.  https://blog.chainalysis.com/reports/bitcoin-price-surge-explained-2020

Are their points valid or hogwash? To summarize they boil it down to demand vs liquidity (yeah that bit is obvious), but they characterize the differences in demand namely big name institutional investment. Again widely discussed in this forum but this chart is slick if the underlying data is valid:

Right now, the amount of liquid Bitcoin is similar to what it was during the 2017 bull run. But the amount held in illiquid wallets is much higher, currently representing 77% of the 14.8 million Bitcoin mined that isn’t categorized as lost, meaning it hasn’t moved from its current address in five years or longer. That leaves a pool of just 3.4 million Bitcoin readily available to buyers as demand increases.

They also highlight an large inflows to exchanges primarily serving North America:

North American exchanges were losing Bitcoin on net in the early part of the 2017 bull run, and became a net receiver as price began to peak. This time around though, North American exchanges have been in the green throughout, with inflows ramping up to higher levels than at any point in the 2017 run in the last few months.

Similarly, we also see much higher net inflows to exchanges allowing crypto-to-fiat (C2F) trades compared to 2017. C2F exchanges are playing a bigger role in this surge than in 2017, when crypto-to-crypto (C2C) exchanges, used mostly by traders swapping many different types of cryptocurrency, drove more of the market. This, combined with the accumulation of Bitcoin by investor wallets that tend to hold for long periods of time, suggests that first-time Bitcoin buyers and buyers looking to unload fiat currency for Bitcoin as a hedge against worrisome macroeconomic trends are responsible for much of the current demand.

This is good news for cryptocurrency
While we can’t know if prices will continue to rise, the current Bitcoin surge portends good things for cryptocurrency — not just because prices are rising, but because of why they’re rising. A comparison of this bull run to that of 2017 suggests that investors have become savvier and more strategic, buying Bitcoin to fulfill a specific use case rather than to speculate on the new hot asset. If Bitcoin can continue to be an effective hedge against macroeconomic trends, we believe more and more institutional investors will put money into the asset, leading to even more mainstream adoption.

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To summarize they boil it down to demand vs liquidity (yeah that bit is obvious), but they characterize the differences in demand namely big name institutional investment. Again widely discussed in this forum but this chart is slick if the underlying data is valid:

As you said, this point has been excessively discussed, and I've chimed in a couple of times about how the demand and supply ratio would influence the price; A fixed supply rate means we are technically immune to supply shocks and a growth in demand, without a growth in willingness of holders to sell would have a positive effect on price. This does not mean bitcoins would be difficult to purchase or become scarce, but rather most people are seeing the potential value and putting a premium on it.

Similarly, we also see much higher net inflows to exchanges allowing crypto-to-fiat (C2F) trades compared to 2017. C2F exchanges are playing a bigger role in this surge than in 2017, when crypto-to-crypto (C2C) exchanges, used mostly by traders swapping many different types of cryptocurrency, drove more of the market. This, combined with the accumulation of Bitcoin by investor wallets that tend to hold for long periods of time, suggests that first-time Bitcoin buyers and buyers looking to unload fiat currency for Bitcoin as a hedge against worrisome macroeconomic trends are responsible for much of the current demand.

The fall of the ICO market could be the reason for this. As at late 2016 through to early 2018, new projects were springing up all around and the altcoin market was in a hype phase, most of the projects ran ICOs and accepted funds in BTC and ETH (maybe a couple of other currencies too), leading to an increase in C2C transactions. Fast forward to now, we do not have as much new projects springing up and crowdfunding is not as popular.
Bitcoin these days is more commonly juxtaposed with Gold or hard fiat currencies than altcoins, as a hedge against inflation.
Overall, the current rally is different than any we have seen (although, it would be the first I'm actually experiencing). After a couple of bull runs, investors have become more aware, and would have learnt from previous experience. They've seemed to also raise the expectations, BTC is currently closing in on $19k with no real excitement in the market or media and also no hyper fomo yet, makes me assume we're only getting started.

[Casdinyard]

I'd say expectations are higher for this year than in 2017 simply because we have already experienced the ATH and since there is a huge price increase at this moment,many people or investors are anticipating the market price to again touch and even break the ATH, unlike before wherein people are almost clueless of how much could the market price be. Many of us are now hesitant to invest at this point because of fear that market price could fall in a sudden without prior notice. There is also a tendency that investors would sell upon reaching the $20k mark, because that was the moment wherein price declined.

[buwaytress]

Difference from my perspective: mainly, that the majority of people in the space now are completely different. I was a newcomer in 2016, and can't really explain just how different the people using Bitcoin were. In fact, that seems key to me. Most I knew then we're users, and hey we're who I tried most with using it in my initial attempts.

Most I knew since are holders more than users. Everyone now seems louder, more vocal, more knowledgeable but not actually users.

Even looking on the forum you see the ones talking about utility, new features, etc, generally users from that era or earlier. Sure, new ones are always coming along but not the majority.

I know my observation is flawed, circumstancial evidence and haphazard, but that's my impression of what is hugely different.

[cabron]

Back then, investors still have doubts that the bullrun that made bitcoin touch $1200 for the first time in 2011 was just a hype. It once again happened in 2017.

I think the difference between the bullrun back in 2017 compares to what is going on now is that today we already know it's coming and we are ready to enjoy the ride.  

[JimboToronto]

As we approach ATH what is different compared to 2017?

We're still a year ahead of the big rally.

With both of the previous halvings there was a run up past the old ATH several months after the halving that set new ATHs and then retraced before going parabolic half a year later.

Don't compare this to 2017. Compare it to 2016 or early 2013.

We still haven't even passed the old ATH. Later next year the real fun begins. Think 6 digits.

[lkjhg]

It looks like the topic of all forums is about the price of bitcoin reaching All time high,
I am happy, because we are in the bullish season, everyone believes in bitcoin and makes Bitcoin able to go to $ 18000.

[Findingnemo]

We can't simply say that prices will keep on increasing once it reaches new ATH because there are lot of people are waiting to sell their bitcoin for very long who bought at expensive price so if there something waiting for us then it may trigger the chain reaction of panic selling.

[DustyRah]

A wall of investor money and not retail money. Google trend for Bitcoin is very low at 12% which means the people involved now already know about Bitcoin.

[DougM]

Overall, the current rally is different than any we have seen (although, it would be the first I'm actually experiencing). After a couple of bull runs, investors have become more aware, and would have learnt from previous experience. They've seemed to also raise the expectations, BTC is currently closing in on $19k with no real excitement in the market or media and also no hyper fomo yet, makes me assume we're only getting started.

Thanks for your input....I agree this feels more like a start then an end.  

[24Kt]

Overall, the current rally is different than any we have seen (although, it would be the first I'm actually experiencing). After a couple of bull runs, investors have become more aware, and would have learnt from previous experience. They've seemed to also raise the expectations, BTC is currently closing in on $19k with no real excitement in the market or media and also no hyper fomo yet, makes me assume we're only getting started.

Thanks for your input....I agree this feels more like a start then an end. 

I believe crypto users are smarter and more knowledgeable than before. Also, for those noncrypto users that will join this community, they are more cautious now. Unlike in 2017 hype, a lot of people bought their crypto because of the hype without making any analysis first about the investments. I guess, that's their learning phase when it comes to crypto investments.

[dragonvslinux]

More or less everything is different about current price levels than 2017. We didn't go from $10K to $18.9K within a few weeks, more like a few months. Your charts certainly indicate that investor mentality is similar to $900 BTC back in late 2016, that of hodling taking over from trading. Don't be surprised to see $20K for another 6 months though.

[exstasie]

They also highlight an large inflows to exchanges primarily serving North America:

North American exchanges were losing Bitcoin on net in the early part of the 2017 bull run, and became a net receiver as price began to peak. This time around though, North American exchanges have been in the green throughout, with inflows ramping up to higher levels than at any point in the 2017 run in the last few months.

I find this intriguing.

This could be a byproduct of the increasingly rigid regulatory atmosphere. The FATF travel rule, exchanges segregating between their US/EU platforms and the rest of the world, the UK banning crypto derivatives, Bitmex being charged, etc. Less inflows and volume on opaque and unregulated exchanges, and more inflows in the opposite direction.

This is exactly what CME executives were getting at when they said they would "tame" Bitcoin a few years back. It's also exactly what the SEC wanted to see before they'd be willing to approve an ETF.

[aioc]

By now investors have learned the volatility of the market, it's not about buying what you can, investors are now going long term, they know what to look, investors are now more aware pf correction, FUDS, FOMO, I don't think we'll have a massive dump after another all time high, the market is very much different compared three years ago, the pandemic did not stop the market from gong up, I don't think another all time high will.

[pooya87]

the difference is a pretty simple and obvious one, the 2017 rise was a bubble and today's rise is growth.

it is exactly similar to the 2016-17 rise too when price initially reached the ATH of that time (that was at $1200). the 2013 rise to that ATH was a bubble and price went above the intrinsic value whereas the 2016-17 rise to that ATH was a natural growth that happened based on increasing adoption.
everything else is just explanation and sometimes justification of that increasing demand.

[sunsilk]

It looks like the topic of all forums is about the price of bitcoin reaching All time high,
I am happy, because we are in the bullish season, everyone believes in bitcoin and makes Bitcoin able to go to $ 18000.

Not for the end of this year. It's just like we're tasting the appetizer of the upcoming bull run. The run does look like a bull run but the best is yet to come. As you see, we're in the ongoing correction and we haven't yet reached a higher peak than $18,000.

Don't compare this to 2017. Compare it to 2016 or early 2013.

We still haven't even passed the old ATH. Later next year the real fun begins. Think 6 digits.

I reckon that this is true and that makes it exciting to wait until the next year.

[Russlenat]

Based on my experience in 2017, I learn that bitcoin is so "volatile", it could pump or dump but that is not something to worry as the law of average will apply. Just like the current price, I don't think it's going to pump continuously that we will not see some correction.

I know the correction is gonna happen soon, but because I learn some technique in 2017, I won't continue to hold, instead, I'll convert on usd value so the value will not drop as bitcoin will dump.

Some are still bullish but the matured minds bitcoin will not reach a higher price in just a very short period of time.

[Lucius]

For starters, we could say that there is no difference between what happened in 2016 and what is happening today in terms of price movements - because after both halving the price went up, but this time it is not x2, but by the end of the year it may be x3. Coincidence or not let everyone judge for themselves, but smart people have long said that nothing happens by accident.

What we all see and most agree that this bull run is definitely related to the money of large companies and funds located mainly in the USA (so far), and that this was not the case during 2016/17. Also, what did not happen then was the pandemic that led to some very problematic financial decisions by which most countries save their economies - which obviously scares many investors who think that fiat is more and more like a melting ice cube.

The only constant we have is Bitcoin, everything else has changed including that people have become much smarter (at least those who have learned the 2017/18 lesson).

[JRoa]

I'd say expectations are higher for this year than in 2017 simply because we have already experienced the ATH and since there is a huge price increase at this moment,many people or investors are anticipating the market price to again touch and even break the ATH, unlike before wherein people are almost clueless of how much could the market price be. Many of us are now hesitant to invest at this point because of fear that market price could fall in a sudden without prior notice. There is also a tendency that investors would sell upon reaching the $20k mark, because that was the moment wherein price declined.

The greed is so high where I can say that we are still in the beginning of the mark up phase because there are still institutions or powerful persons who keep acquiring bitcoin right now. I notice that the daily volume is so high compared in the year 2017. The investors and traders are also increased in these past years so for sure that the demand will rise especially when it is now near at the ATH. I'd like to see Bitcoin ranging $30k - $40k next year.

[thecodebear]

A lot is different now.

The market is much larger now, though that always happens in each successive market cycle obviously.

Some key differences though are that
1. Mainstream finance applications now support bitcoin, like Robinhood and of course Paypal is just starting to allow this.
2. Institutional investors / Wall St are much more in the game. Institutional investment barely existed in 2017, and it is still only a tiny bit but it is increasing rapidly this year. Institutional investment right now is like where retail investment was in maybe early 2013 - it exists and is starting to grow rapidly now but is still only a tiny fraction of what will eventually come into Bitcoin and crypto.
3. Bitcoin is viewed as mainstream now. In 2017 Bitcoin was making headlines in the media for its parabolic run. Now Bitcoin has been a normal thing to talk about in the finance media for the past couple years. Even a good amount of the well known Bitcoin haters have been changing their tune. While owning Bitcoin isn't yet mainstream, Bitcoin is accepted as a normal part of the finance world now. It has (mostly) lost its stigma of being this dangerous thing that'll lose all your money unless you're lucky. Bitcoin/crypto is now considered a legit asset class.
4. The Bitcoin infrastructure is far larger and more sound. Segwit is no longer some controversial new upgrade, LN (while still very small) has been out for a while and isn't vaporware anymore, 3rd party payment networks are larger, ways to buy bitcoin are much more diverse (no longer just exchanges and localbitcoin, now you've got robinhood, paypal, grayscale is much larger and growing very quickly, Wall St companies and exchanges offer trading and storage, various futures markets if you just want to bet on the price and not actually invest).
5. The ICO boom was a big factor in the last crypto bull run, but the majority of that was hype with no substance. DeFi is the ETH based thing that will help drive this bull run, and it is much more real than ICOs because its offering actual financial products rather than hype based on ideas without any real market presence. DeFi should survive long term and will have a far larger impact on crypto as a whole than ICOs did.


Also the fact that we're not even in the 2017 stage of the market cycle now. We're in the 2016 stage. The real bull run hasn't even begun, and is likely 3-6 months from even starting.

I think the most exciting thing about Bitcoin price possibilities at this point is that institutional investment as of late is driving this price surge back to nearly last market cycle's peak. This is exciting because institutional investment is still absolutely TINY! It's barely even started and it's already driven the price back to nearly the ATH. It is easy to see institutional investment growing 20x, 30x, 40x, 50x this decade from where it is now - taking a more long term view than just the rest of this market cycle, but even just in the next year or two before the next long term peak its easy to imagine that retail investment could go up several times over by then. Combine this with the fact that the retail frenzy hasn't even begun yet, well its not hard to imagine the price breaking $100k in the next year or two.