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Bitcoin: Steps to next bull run not as simple as in 2017

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With Bitcoin surging past $10,000 for the first time in two months and marking its first real big-money move since the halving, is the 2020 bull run here? Well, it’s still too early to say, and global markets are dealing with a host of challenges, but for Bitcoin to sustain this breakout and continue on, everyone has a part to play.

The steps to a bull run aren’t quite as simple as they were in 2017. Three years ago, when Bitcoin rose from $1,000 to just short of $20,000, what fueled the run came from both big-pocketed hedge funds and everyday investors. In short, institutional investors saw a green light with Bitcoin Futures approved by the Commodity and Futures Trading Commission [CFTC] and retail investors jumped on the price parade. This time, the market is quite different. 

Bitcoin in 2020 is not just an outlier market, but one comparable, if not in value, in correlation, or lack thereof, to commodities and equities. Institutional interest and a plethora of retail exchanges have allowed all sorts of investors to either jump in on the price rally, like we saw last week, or liquidate in a cash-crunch as we saw in March. Either way, both facets of the market have joined in, and going forward, both facets are crucial if the next ATH is to be seen.  

Speaking to AMBCrypto, Nick from Ecoinmetrics said that a bull run will occur broadly in two steps, adding that each of these steps will have a primary customer group driving the rally, and a secondary one hanging back, providing momentum. Their roles will switch with a succession of steps, thereby allowing both retail and institutional players to be in the driving seat. It should also be noted that these remarks were made on 23 July, on the eve of Bitcoin’s move over $9,500. 

First comes the run from $10,000 to $20,000, with the former target already met courtesy of yesterday’s pump. This phase will be driven by hedge funds and family offices, said the Ecoinmetrics analyst. He calls this the “Paul Tudor Jones thesis” after the hedge fund manager who revealed he is long on Bitcoin in May 2020 when Bitcoin recovered all of its lost value in two months.

Nick went on to say that this thesis will be a mix of past-FOMO, present momentum, and a hunger for future profits,

“While we stay below the all-time-high BTC price it would mostly be a momentum play by professional investors. These people missed previous opportunities and want in on the action. That’s why they are accumulating now.”

Once the 2017-ATH is surpassed, retail investors will get in on the move, witnessing the early-profits eaten up by professional investors. As mainstream media gives Bitcoin the airtime following the move past $20,000, a bout of retail FOMO will hit the market, pushing the price higher and higher. 

While on the face of it this would mimic the 2017-rally, the difference lies in narrative and appeal, said Nick. Bitcoin’s claim to retail investors of being digital gold “is much stronger,” and while the Federal Reserve continues to print more and more money, which is likely given the current economic situation, the case of Bitcoin as a hedge against rising inflation will be looked at favorably, even by the average Joe. He concluded,

“People can point out at the Fed printing record amounts of money. They can point out to how the stock market is just propped up by Central Banks interventions. They can see that the global economy is not doing well and that using Bitcoin as a hedge against inflation has merits.”

This may just be a theory, but its core elements are present. Narrative and environment-wise, Bitcoin is being seen as an investment and economic crisis hedge. Now, all that’s left for a bull run is for investors to play their part. 


Aakash is a full-time cryptocurrency journalist at AMBCrypto covering primarily the US market. A graduate in Finance and Economics, his writing is centered around regulation and institutional investment within the cryptocurrency space. He is also an aspiring triathlete.
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