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What Made Bitcoin's Last Bull Market Different?

Bitcoin has experienced multiple bull markets, and this latest one, which began in 2018, is markedly different from the last. Between late 2018 and the time of this writing in November 2020, the digital currency's price has climbed more than 500%. Analysts have cited a range of factors as helping drive the latest bull market, including institutional investors, central bank money printing, and the involvement of major payment providers. This piece will review many of these key variables, as well as how they have affected the price of Bitcoin.

Institutional Involvement

One major development that market observers have credited with driving the latest bull market is the growing participation of institutional investors. There are several examples of these financial institutions getting involved in the digital currency space.


In 2018, global financial services firm Fidelity announced the creation of Fidelity Digital Asset Services, designed to provide institutional investors with both custody and trade execution services. When the announcement was made, the financial services giant had more than US$7 trillion in assets under administration.

Abigail P. Johnson, the chairman and CEO of Fidelity Investments, weighed in on this development. "Our goal is to make digitally-native assets, such as bitcoin, more accessible to investors," she said in a statement. "We expect to continue investing and experimenting, over the long-term, with ways to make this emerging asset class easier for our clients to understand and use."

In 2019, Fidelity revealed that it was creating Fidelity Digital Assets, Ltd. to provide similar services to European financial institutions. In early 2020, the new venture secured its first deal with investment manager Nickel Digital Asset Management, which involved supplying the London-based financial institution with custodial services for its digital assets.


The broader digital currency space experienced another strong indicator of institutional interest when Michael Saylor, the chairman & CEO of business intelligence firm MicroStrategy, revealed in September 2020 that his firm had purchased a total of more than 38,000 units of bitcoin, with a value of US$400 million.

He announced this information in a tweet, where he revealed that his firm amassed this trove of Bitcoin by making multiple transactions.

Paul Tudor Jones

Paul Tudor Jones, a billionaire hedge fund manager, revealed in May that he had put "just over 1% of my assets in Bitcoin. Maybe it's almost 2. That seems like the right number right now."[9] He said that fiat currencies will lose value over time, as central banks print money in order to provide economic stimulus. Jones added that he thinks of Bitcoin as a speculative asset, noting that it has only been around for 11 years and is therefore "risky."[9] He also noted its great potential.

"When I think of bitcoin, look at it as one tiny part of a portfolio. It may end up being the best performer of all of them, I kind of think it might be," he stated. "But I'm very conservative. I'm going to keep a tiny percent of my assets in it and that's it. It has not stood the test of time, for instance, the way gold has."

Bitcoin futures

Another example of continued institutional adoption is the rising interest in Bitcoin futures. Open interest in Bitcoin futures contracts reached nearly US$800 million in late October, according to figures provided by data source skew. By the middle of the following month, this figure had climbed to US$976 million, a new record, additional skew figures reveal. The strong interest of institutional investors provides a contrast to the bull run that Bitcoin experienced in 2017, which was driven by factors like "driven by ICOs, press coverage, and retail investor excitement," said Nic Carter, a venture capitalist and digital currency analyst.

"If you gauge metrics of retail investor interest in the asset, whether it's tweets or google searches, Bitcoin is still languishing well below it's highs," he noted. His claims are supported by Google Trends data, which shows that search interest in the term "bitcoin" peaked in December 2017, denoting a value of 100 on their scale. Since falling to a local low in late 2018, this interest has failed to reach a value of 25.

Major Payment Providers Adopt Crypto

Major payment providers have gotten involved with digital currencies, including both PayPal and Square. In early 2018, Square gave users of its Cash App the ability to purchase, sell and hold Bitcoin. PayPal followed suit in October 2020, when it revealed that it would start providing its users with the ability to buy and sell digital assets, as well as hold them, using their individual PayPal accounts. The payment provider revealed that it would offer this functionality beginning in early 2021.

Bitcoin prices rallied after PayPal revealed this information, and some analysts pointed directly at this particular development as fueling the digital currency's gains.

Central Bank Money Printing

As the COVID-19 pandemic affected the global community, governments around the world responded by employing substantial stimulus. Central banks began printing units of currency so they could help jumpstart economic conditions, with a Bank of America report estimating that these financial institutions were producing US$1.4 billion in currency every hour. The assets held by the Federal Reserve increased by trillions of dollars in 2020, having risen by approximately US$3 trillion that year at the time of this writing, according to figures provided by the central bank's website.

In contrast, Bitcoin's supply is capped at 21 million units. Some market observers have claimed that the widespread government stimulus employed in an effort to counteract the effects of the COVID-19 pandemic has helped demonstrate that the total potential supply of Bitcoin is limited, contributing to strong upside.

"There are so many uncertainties in this pandemic, but one thing that seems almost assured is when you print trillions of dollars more paper money, it's going to drive up bitcoin and other cryptocurrencies," Dan Morehead, CEO & co-chief investment officer of digital asset investment firm Pantera Capital, told Yahoo! Finance. "Gold's going to go up, bitcoin's going to go up. It is a hedge to paper currency being debased."

Morehead is not the only one who has espoused this view. Fred Pye, an entrepreneur who serves as president & CEO of Canada-based digital asset manager 3iQ Corp, said the following:

"The unbelievable amount of global liquidity that was created because of COVID possibly doesn't end well. All the wealthiest people in the world have no choice but to consider some kind of hedge against what happens when the taps get turned off because the more they open the taps, the harder the world falls when they turn them off." "When you see some of the world's biggest and brightest money managers and companies protecting their balance sheets and protecting their net worth with Bitcoin, you can see where the demand comes from," Pye continued. "It's really now a digital global hedge against consistent money printing."


Bitcoin has done very well during its latest bull market, its price climbing more than fivefold between a low of nearly US$3,000 in 2018 and its 2020 high of more than US$19,000. Market analysts have pointed to several key variables when explaining these impressive gains. Some have noted the rising interest of institutional investors, which have helped propel the digital asset higher and also improved its credibility. Further, PayPal and Square, highly visible payment providers, have both gotten involved with digital currencies over the last few years, opting to offer users the ability to buy, sell and hold these innovative assets.

Finally, the policy stimulus decisions of governments worldwide have been credited with bolstering Bitcoin' price. By printing trillions of dollars worth of fiat currency in order to help counteract the effects of the global pandemic, central banks have increased the money supply, making each individual unit of currency less valuable than it was before.

Bitcoin, however, is different in that its supply is capped at roughly 21 million units. In other words, under the current Bitcoin protocol, no more units can be produced once that hard cap has been reached. While the 2017 bull run was driven by factors like growing retail interest and highly bullish sentiment, this latest upward trend is being fueled by a completely different set of variables.



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