‘Endogenous factors’ differentiate Bitcoin’s rally from 2017’s
2020 was a much-anticipated year for most of the crypto-community, with many expecting Bitcoin, and by extension, the larger crypto-market, to move significantly on the back of BTC’s halving in May 2020. However, while the world’s largest cryptocurrency has since rallied, the immediate impact of the halving wasn’t exactly felt.
In fact, many argue that contrary to popular perception, the event had no effect whatsoever. This was a sentiment recently shared by Castle Island Ventures’ Nic Carter who said,
“I don’t think the halving had a meaningful effect on the price of Bitcoin.”
Calling the event “eminently forecastable,” Carter claimed that the effect of the halving was already priced in as people were aware of the supply schedule of Bitcoin from day zero.
— PlanB (@100trillionUSD) November 20, 2020
Noted crypto-analyst PlanB, however, wasn’t too far behind as the investor behind the Stock to Flow (S2F) model soon shared a chart that implied that the price movement of BTC, owing to the halving in 2020, was very similar to the ones noted back in 2012 and 2016.
It should be noted though that this chart is far from the complete picture, especially in light of the fact that we are only 6 months out since the last halving.
Although PlanB opines that history will repeat itself, many have argued in favor of why Bitcoin’s price charts may look very different going forward, while also expanding on the many factors that might point to the present rally being very different from 2017’s bull run.
In fact, according to Nic Carter, there are quite a few endogenous factors in play in today’s Bitcoin market.
During the 2017 bull run, it was very difficult for institutional investors to functionally get access to the asset because the tools did not exist back then. Carter added,
“There were no qualified custodians that could help you get exposure to the spot asset. There was very little in the way of prime brokerage. There wasn’t a very robust lending market.”
Today, however, the crypto-industry has matured to a point where it can accommodate capital and offer the financial infrastructure to make big investors comfortable with allocating huge amounts to the crypto-asset class.
Bitcoin from 2017 was trading as an asset that acted as a vehicle that enabled exposure to ICOs, one that involved exposure to altcoins which were even more volatile.
This is not the case today as retail investors and institutional investors are looking to hodl Bitcoin with a long-term perspective and view it as an alternative monetary commodity.