Bitcoin now trades over $40k, another all-time high, boosting the cryptocurrencyâ€™s stellar run from 2020. This next milestone comes a week after it topped $30k. Hereâ€™s whatâ€™s different about this rally, compared to the 2017 run. In 2017, Bitcoin was also getting similar headlines for a sharp increase in value.
2017 In Review
As reminder, in 2017 Bitcoin saw a great run, not too different to what weâ€™re seeing today and garnered similar headlines with a mix of enthusiasm and alarm. However, there are differences in terms of Bitcoinâ€™s trajectory, the performance of other digital currencies and the level of adoption of Bitcoin among more mainstream financial platforms.
Not So Extreme
As remarkable as it may seem, the 2020-2021 run so far is not as extreme as what we saw in 2017. In 2017, Bitcoin soared from around $1k to $20k for roughly a 20x return over a short period, if you were able to precisely finesse selling at the top. Of course, Bitcoin did fall back sharply from itâ€™s 2017 peak.
This time Bitcoin made a low of around $5k during the pandemic lows of spring 2020. Now at $40k, thatâ€™s an 8x return over a similar span as the 2017 run. So even though Bitcoinâ€™s price is now double the 2017 peak, the run-up, though stark, is currently slightly less extreme than 2017.
Other Crypto Assets Fading
2017 may have been more accurately described as a cryptocurrency rally, not a Bitcoin rally. Many other digital currencies saw gains, and many new projects launched as Initial Coin Offerings (ICOs) during the 2017 period, often with much short-term fanfare but without generally seeing long-term success.
Yes, Bitcoin ran up too in 2017, but despite gains, it was often a relative laggard compared to some other assets such as Ethereum and Ripple, as well as various ICOs shooting up in value.
Back in 2017, Bitcoin made up about half the total value of mainstream digital currencies, now that number is closer to 70% according to Trading View. Other digital currencies still exist, but this time Bitcoinâ€™s role is more central. As Bitcoin establishes more of a track record, so it may become more valuable over time, according to the Lindy effect.
A Little More Mainstream
Bitcoin is becoming more mainstream. In 2017, the main way to own it was through specific exchanges dedicated to cryptocurrencies, such as Coinbase. Now more mainstream channels, not directly founded on support for digital currencies are embracing Bitcoin. PayPal
Of course, it is also worth remembering that the 2017 Bitcoin rally was followed by an approximately 80% decline after the top into 2018. Though, despite the volatility, Bitcoin does appear to be becoming a more permanent fixture in the investment landscape. This rally will gain it further attention from mainstream investors, and has a slightly different flavor to its 2017 run.
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