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The price of Bitcoin is now double its historic, 2017 all-time high. Let that sink in for a minute.
At $40,000 per coin, Bitcoin bulls are pushing prices to the max, and the way things are going, that enthusiasm doesn’t appear to be disappearing any time soon. But unlike the bull run of 2017, when a buying frenzy eventually led many to believe that the crypto bubble was ready to pop, this run shows different characteristics.
Rather than parabolic, short-term growth, Bitcoin has been on a steady upward trajectory since March last year. It has not stopped growing in terms of daily performance since then. And today, after starting the day at around $36,859, it maintained its momentum until finally breaking through the $40,000 psychological barrier.
The jump, while impressive, was entirely expected by many important players in the industry. CF Benchmarks CEO Sui Chung told Decrypt that this price rally appears to him to be the perfect time to boost crypto adoption
"Less than a month after Bitcoin broke through $20k, its price has doubled to $40k. The Free Float Market Cap of Bitcoin now stands on the cusp of $600bn, with that of the entire asset class fast approaching $1 trillion.” (It has since crossed that mark.)
According to Chung, the skyrocketing price of Bitcoin is making it harder for crypto critics to deny that we’re witnessing the maturation of an entirely new asset class. “This could be the ‘broadband moment’ for cryptocurrency—where every company and individual needs to think seriously about how they engage and interact with cryptocurrency," he said.
It’s worth noting, however, that big, round numbers have historically been difficult barriers to overcome. And with big pumps in crypto often come big, er, corrections.
Price of Bitcoin Since September of 2020. Image: Tradingview
Bitcoin’s relative strength index (RSI), a metric that measures the balance between buyers and sellers in a marker, is high, which indicates that a lot of traders are rushing to buy as much BTC as they can at the moment. That could mean that a big sell off is around the corner.
Meanwhile, the Crypto Fear & Greed Index also indicates that markets expect a major price increase. This level of hype does look a lot like 2017. The difference this time, though, is the presence of major institutional investors in the Bitcoin market, which have created significant scarcity in the asset. This scarcity effect could potentially grow stronger if these firms stick to their guns and HODL that Bitcoin long term.
The Bitcoin Halving—a once in four years event that reduced mining rewards and essentially halved the daily incoming supply of Bitcoin—is also playing a role in this. There is now less Bitcoin being injected into the markets, and this statistic is now more obvious than ever.
Right now, there is much less Bitcoin on crypto exchanges than in previous years. That HODL mentality is growing, it seems.
But Bitcoin isn’t just sitting in investors’ cold wallets doing nothing either. While the amount of Bitcoin on exchanges is dropping, the number of active addresses are greater than ever. And now that PayPal and other services are warming up to crypto, Bitcoin may soon actually be used by more people around the world too.
