Crypto enthusiasts finally have something to rejoice about after Bitcoin prices hit the $13,000 mark in June before dropping between $10,000 and $12,000 soon after. The last time we saw Bitcoin reach this price was in December 2017, after which Bitcoin went on to reach its all-time high of nearly $20,000 in a matter of days.

The cryptocurrency market remained bearish for all of 2018, but judging by the way in which Bitcoin is charging upwards, breaking resistance after resistance, and repeatedly setting new yearly highs in 2019, it is safe to assume that the crypto winter is behind us. Over the past several years, we have witnessed a cyclical pattern emerging in the crypto space. And with each cycle, we reached new price levels that were exponentially higher than the previous ones. This time around, analysts have come up with bolder price predictions, ranging from $21,000 all the way up to $100,000. All of this begs the question: is the current bull market any different from the last one?

During the peak of the 2017 crypto bull run, several sceptics compared it to the Tulip Mania, as most were convinced that Bitcoin was a bubble. However, since 2017, Bitcoin, along with the other cryptocurrencies, has come a long way in terms of maturity. Bitcoin fundamentals are stronger than ever, institutional interest is at an all-time high, and mainstream adoption is on the rise, strengthening the argument that the market is not based totally on hype this time.

Strong Fundamentals Fueling Confidence

Bitcoin’s hash rate reached its all-time high at 65,000,000 TH/s in June. In simpler terms, the Bitcoin blockchain is more secure than it has ever been and breaching the network would require unimaginable computing power. In addition, the average number of transactions on the blockchain has consistently risen. As reported by the P2P platform, localbitcoins.org, the weekly average transaction volume has remained above $50 million since September 2017.

Daily active Bitcoin wallets crossed the one million mark in June this year, providing another indication that more people are now using Bitcoin.

The Rise in Institutional Involvement

Institutional involvement in the crypto space over the past year has been incredible. Fidelity is set to launch crypto trading for institutional investors, seeing a huge demand in that market segment. Earlier this month, the CME Group saw open interest at 5,311 contracts, totalling 26,555 BTC (approx. $316 million), significantly higher than during the 2017 price peak. Furthermore, JP Morgan, one of the largest investment banks in the world, launched its own token, JPM coin, to settle payments internally. Moreover, the biggest social network in the world, Facebook, is set to launch its own cryptocurrency, Libra Coin next year. Regardless of the use cases of these institutional cryptocurrencies, they are a step in the right direction towards giving more legitimacy to the crypto space.

Bitcoin as a Safe Haven?

To most, the thought of Bitcoin as a safe haven may sound completely absurd, given its volatility. However, a recent study from Grayscale Research analyses the correlation between Bitcoin and macroeconomic developments illustrating the use of Bitcoin as a hedge against political unrest and macroeconomic uncertainty. Even though Bitcoin does not really feature in the conventional list of safe havens, more people are relying on the cryptocurrency as a hedge against movements in the “traditional” financial market. Correlation does not necessarily mean causation, but the key takeaway here is that Bitcoin and other cryptocurrencies are becoming more popular among investors as a means of diversifying their portfolios.

In order to stimulate their economies, central banks around the world are turning dovish: cutting interest rates and printing more money. While this has made investors rejoice in the short term, Bitcoin HODLers are confident that in the long term, Bitcoin will outperform fiat currencies whose supply is growing at a rapid pace.

The cryptocurrency market is definitely more mature than it was during the last bull run and there is more intelligent money in the market than there was the last time. FOMO will still definitely be a huge catalyst in driving up prices, but we cannot ignore the other developments that have added legitimacy and myriad use cases for cryptocurrencies paving the way for mainstream adoption. Moving forward, it remains to be seen how prices will move. Past performance is not an indication of future results, but if the observed pattern were to continue, we could be looking at a year-end price well above the $20,000 mark.

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