December 21, 2020

Hidden Bull Market

In December 2017, Bitcoin peaked at a price of around 20,000 US dollars. Nearly three years later, Bitcoin broke its all-time high on 16 December 2020. Still, it's quiet around us, and there's still relatively little media coverage of Bitcoin, especially if you compare it to the total hysteria of three years ago. Why is this happening? We'll explain.

Hidden Bull Market
Hidden Bull Market

by Steven Eblé

Bull market

To start with, it's good to know what a bull market means in a financial market.

The bull (the bull ) is a symbol of price increase, with a bull market nothing else is meant than a long period of sustained price increase.

Now that we know what a bull market is, we can look at Bitcoin's history. Because when is Bitcoin in a so-called bull market?

History of the Bitcoin

The graph below is on logarithmic scale, and shows Bitcions price data from December 2013 to December 2020. It shows that Bitcoin broke the all time high of December 2013 in early 2017 (red arrow). This was followed by a bull market that lasted a year. During this bull market period, Bitcoin rose 1528% in 254 days. The increase ended in December 2017 at around 20,000 US dollars. Now, three years later, the same thing is happening. The previous all time high of December 2017 has been broken (green arrow), which could mean that 2021 will be the year of a Bitcoin bull run.

Institutional trust

So there are reasons to believe that Bitcoin is at the beginning of a bull run. But why is it so quiet in the media and around us?

This has everything to do with who is currently causing this price increase. In 2017, it was mainly the private individual who bought Bitcoin. People like you and me bought Bitcoin in the hope of earning an extra penny with it. This was also the reason Bitcoin was talked about a lot in social circles. At the time, there was little institutional confidence in the digital currency. But that time seems to be over now that it's not the private person who is causing the price increase, but large institutional investment funds. One example is Microstrategy. This is a company that provides business intelligence, mobile software and cloud-based services. They currently own more than 500 million dollars in Bitcoins. In December, they even bought 50 million dollars worth of Bitcoin at a price of 19200 U.S. dollars.

The crypto market is maturing

The reason that more and more investment funds dare to put large sums of money into Bitcoin and other crypto currencies is because the market is maturing.

In October this year Paypal indicated that crypto currencies could be bought via their platform. This will ensure that adoption will become easier and that more people will gain access to the market.

The S&P Dow Jones, one of the largest index funds in the United States, also announced in early December that a customizable crypto currency indexing service with crypto data provider Lukka will be available in 2021. All these developments radiate confidence to large investment funds.

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