Think back to 2017. Crypto was everywhere. The celebrities hawking ICOs included DJ Khaled, â€œFloyd Crypto Mayweatherâ€� and longtime blockchain enthusiast Paris Hilton. The most watched comedy on television, â€œBig Bang Theory,â€� named an episode â€œThe Bitcoin Entanglement.â€� Long Island Iced Tea made the worldâ€™s most natural pivot, rebranding itself as Long Blockchain Corp. (The stock jumped 200%.)Â
And now? Crickets. Even though the price of bitcoin seems to break a new record every five minutes, erupting from $4K to $40K in less than a year, for some reason this bull run feels different â€“ not as mainstream, not as talked about, not as Paris Hilton-y.Â Â
So is it really different? There are many ways to measure a bull cycle. The most obvious is by looking at the price, another is to look at things like the frequency of â€œbitcoinâ€� in Google searches and a third is to evaluate the technical and fundamental metrics â€“ smart analyses from the Nic Carters and Willy Woos of the world.Â
But then thereâ€™s the qualitative side. I wanted to find out how the bull run looks â€“ how it feels â€“ from the perspective of OG bitcoin hodlers. And if this cycle is different, why? And where are we headed?
Letâ€™s start with the kid.
i. â€˜An excellent year!â€™
When Erik Finman was 12 years old, his older brother took him to a â€œvery chill protestâ€� in Washington, D.C. This was in 2011. Finman happened to notice a guy wearing an orange shirt that had a big B in the middle.
â€œWhatâ€™s that?â€� the 12-year-old asked.
â€œItâ€™s bitcoin, man. Itâ€™s going to end Wall Street, bro.â€�
So the 12-year-old looked into this bitcoin thing. He grew curious, and so did his older brother. His grandmother had just given him $1,000. (She thought she didnâ€™t have much longer to live, so she gave checks to all of her grandchildren.) He tried to give it back. His grandma wouldnâ€™t take it. The check was supposed to go for a scholarship fund but instead the kid used it to buy bitcoin. The price of each coin was around $10, so he bought 100 bitcoin. Thanks, Grandma. (Happily, her health improved. â€œSheâ€™s actually my only living grandparent now,â€� says Finman.)Â
See also: Jeff Wilser â€“ Cathie Wood: Ahead of the Curve
â€œBitcoin became an obsession,â€� Finman remembers. While the rest of his friends were into Call of Duty or Pokemon, the 12-year-old hustled to get more BTC, texting with strangers to buy and sell. â€œI felt like a Wall Street broker.â€� He would eventually cobble together over 400 bitcoin.
You know those dot-com wunderkinds who drop out of college? Thatâ€™s nothing. When Finman was 15 he dropped out of high school. Since then he helped start the crypto payments company Metal Pay, built a real-life Dr. Octopus suit (inspired by Spider-Man), and launched a satellite with Taylor Swift. (Itâ€™s easy to connect with T Swift, says Finman. â€œIMDBPro lists everyoneâ€™s agent; itâ€™s only $30 per month, and the agents check their email.â€�)Â
During the frenzied 2017 bull run, the media couldnâ€™t get enough of the Teenage Bitcoin Millionaire. The Guardian photographed him sprawled over a pile of cash, wearing sunglasses, a hundred-dollar bill sticking out of his mouth. GQ covered his streetware. But guess who also consumes the media? Hackers. They spotted a rich target and came for his digital gold. â€œI was sick to my stomach,â€� says Finman. â€œI got emails that threatened to kill me if I didnâ€™t give them bitcoin.â€� They also threatened his parents, even mentioning them by name along with their work addresses.Â Â
â€œI was terrified to walk on the sidewalk,â€� Finman remembers. He had insomnia for days. The worst of it came on Aug. 21, 2017 â€“ the day of the eclipse. Hackers knew that everyone would be staring at the sun and away from their computers, so they chose that precise moment to pounce. Erik watched the eclipse like the rest of the world but he happened to get tired of it a little early,. He returned to his computer to see crazy flickering and movements on his screen. Oh s**t, he said to himself, and somehow he booted them from his system just in time. (Amazingly, he didnâ€™t lose any crypto to hacks, but says his email and Twitter were compromised for months.)
And now, his life in the current bull run? There are no calls from GQ. No fawning from The Guardian. Finman has a theory for why this cycle feels so under the radar: The cultural space that was once occupied by crypto is now gobbled up by politics and the coronavirus pandemic.Â
â€œ[Donald] Trump gets more clicks than crypto,â€� says Finman. He thinks of the earlier bull run of 2013 as a â€œgolden era,â€� not just because of the wealth creation but because â€œyou could talk about things other than politics. Back in the day, cool young people were doing cool things, and building cool s**t. I feel like that has been lost.â€�Â
He misses going to parties and talking about new apps and crypto, instead of Trump and pandemics. â€œMaybe [President-elect Joe] Bidenâ€™s not as interesting as a personâ€� and â€œheâ€™ll get less clicks,â€� says Finman. â€œMaybe bitcoin is more interesting than Joe Biden.â€�
Finman and I spoke weeks before the mob of Trump supporters invaded the Capitol, but that wrenching day of Jan. 6 seemed to encapsulate his point. While most of the nation watched, horrified, as chaos engulfed the nationâ€™s capital, which perhaps said something dark about America, the price of bitcoin surged another 10%. This is perhaps the great irony of blockchain in 2020 and 2021: the raucous celebrating of bitcoin, juxtaposed against so much real-world suffering (nearly 2 million deaths from the coronavirus) can seem tone-deaf.Â
As much of the world grieves for the dead, struggles to pay rent or simply tries to make it through the drudgery of quarantine, many of the bitcoin bulls whistle a different tune. â€œ2020 was an excellent year!â€� tweets a cheerful crypto investor. Another gushes that â€œ2020 was a hell of a year. Iâ€™ve never seen a market like it and Iâ€™m fortunate to have closed it on a high note â€¦ Not only did I finish at all-time highs, but #Bitcoin has finally given me a clarity that Iâ€™ve been seeking for awhile. 2021 should be special.â€�
ii. â€˜Not yet interesting enough.â€™
Erik Voorhees, the CEO of ShapeShift, has also been around since near the beginning. He takes us down memory lane. In 2011, the price hit $31, then the bubble popped and it would crater to $2. These were dark days for bitcoin. â€œEveryone who was skeptical had every reason to believe that it was over,â€� remembers Voorhees. â€œAll the people hating on bitcoin had a field day for months and months.â€� The next bull cycle wouldnâ€™t come for another two years, in 2013, when the price again cracked $31. Voorhees remembers giving a talk at New York University with Charlie Shrem, and during the talk the price pumped $5 as they celebrated. â€œAll of the students thought we were a little weird.â€�
Voorhees has a contrarian take. â€œIt mostly feels the same,â€� he says. â€œWhen you go through several seasons of this market, it feels the same. You have this crazy bubble and then a period of denial after the bubble and then a dark bear market for a while and then a period of stabilization and then another period of growth. That cycle feels very natural to me.â€� Voorhees says you canâ€™t predict how high it will get or when it will crash, but the overarching patterns feel consistent and predictable.Â
But does the actual price history bear this out? Letâ€™s go to the graphs. When you first look at a chart that displays the history of bitcoinâ€™s price, these patterns are hard to spot. It looks like bitcoin is worth peanuts for years, then you see the to-the-moon bull run of 2017 then the crash and now today. Many traders look at it differently. They switch the scale of the chart to logarithmic, which basically plots the percentage change of the price.Â
Â For example, a jump in price from $1 to $1.1 is a 10% gain, just as a jump from $10,000 to $11,000 is a 10% gain. Both of those jumps would give an investor the same rate of return, so theyâ€™re displayed the same on the graph. And when you switch the chart to logarithmic, suddenly you do see the patterns. In fact, itâ€™s easy to see. You see the bull and the bust cycles that repeat several times over the last decade, and you see that each time bitcoin â€œcrashesâ€� the new level is higher than the prior cycle. Looked through this prism, $40K prices look less like wild, uncharted territory and more like the smooth continuation of a decade-long trend. (If you squint.)
As for why we donâ€™t see the same breathless media coverage and why bitcoin is not in the larger cultural conversation? â€œThatâ€™s a simple answer,â€� says Voorhees, and then adds a slab of juicy red meat for the bitcoin bulls: â€œWeâ€™re not in the real bubble yet.â€� His logic is that, yes, bitcoin has surpassed its previous ATH, but while â€œeveryone in crypto is freaking out and excited, because theyâ€™re like, â€˜Yes, weâ€™re back!â€™â€� â€“ and while it prompts daily articles from CoinDesk on each new tick upwards (such as $27K, $28K, $29K) â€“ this is not yet interesting enough to curry much mainstream fascination.
A more useful and accurate time comparison for where we are in the current bull cycle, says Voorhees, is not the frothy top of December 2017, when bitcoin flirted with $20K and when the FOMO lured in bitcoin newbies.Â (Full disclosure: I was one of these newbs, and I bought bitcoin near the top that I still HODL.) Voorhees says a better comparison for where we are is February of 2017, when bitcoin had once again breached $1,000 â€“ after three years of wallowing in the triple-digits â€“ and established what was then a new ATH.Â
Follow the logic further. â€œItâ€™s not yet interesting to the mainstream. The super mainstream interest occurs at the tail-end of the bubble.â€� As for when that will happen? â€œWhen we approach $100 grand, thatâ€™s when youâ€™ll see it all over the place. And that means [weâ€™ll be] in the latter stages of the cycle.â€� Voorhees guesses that the current cycle will take bitcoin â€œsomewhere between $100k and $300k,â€� and that this will occur â€œbetween six and 12 months from now,â€� and then â€œthe bubble will pop, and it will crash down over the next year, probably back below $100k, and probably never below $20K.â€�
iii. â€˜Plebs buy to sell, chads buy to buy more.â€™
My personal theory: In the last bull run, there was still the widespread hope that we could use bitcoin as a way to buy a proverbial cup of coffee. This made bitcoin easy to understand. This made it easy to talk about. The â€œHow to Use Bitcoin!â€� story was catnip for mainstream publications, offering easy hooks for pieces like Business Insiderâ€™s â€œI spent a day trying to pay for things with bitcoin and a bar of gold.â€� But widespread merchant adoption never happened. Those stories faded. The mainstream lost interest and the actual use case of bitcoin is now trickier to convey. â€œA hedge against inflation, as rampant monetary easing dilutes the dollar!â€� is a tough bumper sticker.Â
Something else is different now. Back in 2017, much of the nation still had never heard of bitcoin, which made it easy for the producers of ABC News, say, to green-light a segment like â€œWhat is bitcoin, the worldâ€™s most popular cryptocurrency?â€� Segments like this were everywhere. The Today Show asked, â€œWhat is cryptocurrency, and should you risk your money with it?â€�. Now those explainer videos have already been done. That ABC producer would likely ask, â€œDidnâ€™t we already run this story? Old news. Pass.â€�
The peak of 2017-18â€™s news coverage came in The New York Timesâ€™ â€œEveryoneâ€™s Getting Hilariously Rich and Youâ€™re Not.â€� The top image of that article featured two crypto bros â€” one wearing a Bitcoin sweater, one wearing an Ethereum Sweater, which, it must be said, is tougher on the eyes than the Ugliest Christmas Sweater. I reached out to the Ethereum Sweater Guy, whose name is Mathieu Baril (whoâ€™s now Operations Lead at DerivaDEX, a crypto exchange), to see whatâ€™s changed between now and then.Â
â€œThe 2017 euphoria was strange,â€� Baril remembers, as the San Francisco meet-ups became â€œa bit more crazyâ€� and full of those trying to get rich quick. At one 2017 meet-up, Baril says, â€œsome people were walking next to Pieter Wuille and didnâ€™t even know he was a core dev.â€� Baril says that while heâ€™s now seeing that same kind of get-rich-quick euphoria with decentralized finance (DeFi), the bitcoin run itself feels less hype-y, more solid.Â
To those following the space closely, the drivers of the bull run are now well understood: an influx of institutional capital (such as MicroStrategyâ€™s trove of over 70,000 BTC), growing optimism from traditional finance (like JPMorgan floating a price of $146K), and a grudging appreciation for bitcoin as â€œdigital goldâ€� that can hedge against inflation.Â
â€œThis bull run was catalyzed by COVID,â€� says Jill Carlson, principal of Slow Ventures and a CoinDesk columnist. â€œOver 20% of all U.S. dollars were created in 2020. This staggering statistic rightly has asset managers fearing inflation and turning to bitcoin.â€�Â
That institutional capital didnâ€™t just appear by magic. It took years of behind-the-scenes work. The secret engine of this bull run could have something to do with an obscure bit of paperwork called an â€œSOC 2 audit,â€� says Moe Adham, co-founder of Bitaccess, a Canadian startup. SOC stands for â€œSystem and Organization Controls,â€� and while it might lack the sex appeal of â€œThe Big Bang Theoryâ€� or a 2017-era Jamie Foxx-backed ICO, it could have a more enduring impact.Â
In the last bull run of 2017, says Adham, it was extremely difficult, if not impossible, â€œfor listed companies and institutions to actually invest in bitcoin and carry that balance over a yearâ€™s-end, and satisfy a financial audit.â€� Itâ€™s one thing for you or me to scoop up some bitcoin on an exchange, but Adham says that a â€œlisted companyâ€� (such as Square) needs a more buttoned-up custodian that can withstand the rigors of an SOC 2 audit.Â Â Â Â
For the last few years, the rise of institutional custodians such as BitGo, Gemini and Coinbase have quietly built out the pipes and plumbing to make these kinds of SOC audits doable. â€œFrom a regulatory and compliance perspective, Bitgo â€¦ has been hammering away at this problem for a very long time,â€� says Mike Belshe, CEO of BitGo. â€œWeâ€™re a regulated institution. Anybody outside of our walls thatâ€™s regulated needs to work with regulated parties, so now theyâ€™ve got partners that they can work with.â€�
Jill Carlson agrees with those who say that this bull run feels different. â€œThat institutional money will be stickier and have a stronger hand,â€� she says, adding that it will â€œopen the door for even more institutional money to pour in.â€� Unlike in 2017, Carlson notes, the bulk of the incoming funds are for the (relatively) more proven assets of Bitcoin and Ethereum, as compared to the rampant gambling on the more exotic blockchain projects that lured speculators with visions of 100X returns, many of which have gone bust.Â Â
The idea of institutional â€œstrong handsâ€� makes sense. Dovey Wan, founding partner of Primitive Ventures, says wealthy individuals who allocate only a small slice of their pie to bitcoin are able to outlast the inevitable dips in price, whereas the â€œweaker handsâ€� donâ€™t have that luxury. â€œIf you have a small net worth, you canâ€™t HODL a large percentage of bitcoin due to price volatility,â€� explains Wan. Or as she once posted on Weibo, â€œPlebs buy to sell, chads buy to buy more.â€�
While Wan (whoâ€™s based in Hong Kong) agrees this is a fundamentally different bull market than in 2013 and 2017, she notes that itâ€™s not perceived the same way around the globe. China still has a more bearish view. â€œMost Chinese traders and crypto people have not been following the â€˜institutional influxâ€™ from the West closely, and domestically crypto sentiment has always been more bearish due to local regulatory stiffening,â€� explains Wan, such as the regulators cracking down on exchanges and mining, or the imprisonment of Chinese exchange founders like Star Xu.Â
Wan says the difference in crypto sentiment between the East and West is so stark, a savvy trader can make easy money by shorting bitcoin during Chinaâ€™s daytime and going long bitcoin during the U.S. daytime. â€œItâ€™s a simple straight alpha strategy since 2018.â€�Â Â
iv. â€˜Filling itself out.â€™
Marshall Hayner started mining bitcoin on the original 2008 MacBook Pro, which fried his laptop. When he brought it into the Apple repair shop, the guys laughed at him for mining â€œbitcoin,â€� which they had never heard of. Trading was tough. There was no CoinBase or Binance or even a Mt. Gox. Back then they bartered with bitcoin for things like T-shirts, socks and Visa gift cards â€“ ironic, given bitcoinâ€™s anti-bank ethos. â€œI just wanted to prove to myself, does this really work?â€� says Hayner. They traded in forums and chat rooms. The goal was not to make money, but to experiment and play.Â
In 2010, Hayner had scooped up enough bitcoin that he remembers thinking, If this thing ever goes to $20, Iâ€™ll be a millionaire. When it did finally hit $20 he happened to arrive in Belize for a vacation with his girlfriend. Practically as soon as the plane landed he told his girlfriend that he needed to leave because he had to go back home and access the hardware wallet on his computer to sell crypto. She wasnâ€™t thrilled. So he raced back home to Boston, desperate to cash out and get rich â€¦ but while he was on his flight the price plunged 90%, back to $2. The good news is he would eventually become a millionaire, the bad news is the girlfriend didnâ€™t last.
Then came the 2013-14 bull run, when bitcoin shot from $13 to $1,000 in just under a year. â€œ2013 was the moment when it actually proved to have real commodity value,â€� says Hayner, whoâ€™s now the CEO of Metal Pay (he launched it with Erik Finman, the Teenage Bitcoin Millionaire.) Banks in Greece and Cyprus failed. ATMs ran out of money. Europeans were hungry for an alternative to fiat. This wasnâ€™t just speculation or FOMO Â â€“ people bought bitcoin to use it. â€œIncremental demand for bitcoin is coming from the geographic areas most affected by the Cypriot financial crisis Â â€“ individuals in countries like Greece or Spain, worried that they will be next to feel the threat of deposit taxes,â€� one fintech analyst wrote at the time.Â
If 2013 was driven by Greek and Cyprus demand and 2017 driven by retail speculation (or hype and FOMO), what does that mean for today? â€œ2020 is the year where most people have heard about bitcoin, and most people have heard about cryptocurrency,â€� Hayner reasons, so theyâ€™re investing with eyes wide open. â€œThis time around, almost everyone knows what this is.â€�
If everyone knows what bitcoin is, that might explain why the Google search results arenâ€™t anywhere near the booming heyday of December 2017.Â But that could be changing. Just a month ago, when I began researching this article, searches for â€œbitcoinâ€� were only about 20% of that December peak. Now itâ€™s climbing. Just in the past week, as the price of bitcoin shattered records by the hour, the searches more than doubled. This gives some ammo to Voorheesâ€™ theory: The public will catch up if the price keeps rocketing.
Anecdotally, it does seem like the pace of bitcoin chit-chat has started to pick up. Iâ€™m now getting texts from buddies asking how to buy crypto, which hasnâ€™t happened since early 2018. And now we see sentiments like this: â€œHelped my 81-year-old grandmother put her $600 stimulus check in bitcoin yesterday,â€� one user tweeted on Jan. 6. â€œShe gave me instructions to distribute it between her children in the case of her death. Her mother lived to 101. â€¦ Personally helping mint a new hodler every week as of late.â€�
I spoke with one last old-school bitcoiner to get some perspective. â€œIâ€™ve lost count, but Iâ€™ve been through seven or eight of these bull cycles,â€� says Charlie Shrem, the founder of the early (and now legendarily defunct) exchange BitInstant, and who â€“ perhaps more than anyone â€“ has seen both the peaks (easy millions) and valleys (jail time) of crypto, and who is now hosting the podcast Untold Stories, chronicling the history of bitcoin. â€œ$1 to $10, $10 to $100, $100 to $1,000, and now $10,000 to maybe $100,000, or plus,â€� says Shrem, almost nostalgically. â€œThis one was inevitable.â€�
Shrem suspects the bitcoin price is â€œfilling itself out,â€� in the same way that an air mattress needs to be filled before it can support your weight. In other words, if bitcoin is to actually be the relevant currency that its advocates envision, then the price almost must rise and keep on rising, just as an air mattress needs to be filled. Otherwise it wonâ€™t do what itâ€™s supposed to do. (He acknowledges itâ€™s also possible that it goes to zero.)Â
â€œI think bitcoin wants to be a six-figure number,â€� says Shrem. â€œAnd I think people who own bitcoin now want to see the value of one bitcoin be a six-figure number.â€� Itâ€™d be tough to find a bitcoin owner who would disagree, but then again every owner of shares in Pets.com (a poster-child disaster from the dot-com era) wanted to see it go to the moon.
Shrem, like nearly everyone who spoke to me, says that this one really does feel different. For the prior bull cycles, even for the crypto-optimists, he says there was always an undercurrent of anxiety as the price ascended, like watching â€œa rocket ship that takes off, and every time thereâ€™s a 30% chance that something will go wrong.â€� Now he doesnâ€™t feel that anxiety. He sees less of the FOMO, less of the hype, less of the greed. â€œI donâ€™t see anyone talking about Lambos on Twitter,â€� says Shrem.
Then again, as one crypto enthusiast tweets, â€œLambo bro, Bitcoin to the moon bro.â€�