Bitcoin the premier coin has enjoyed an exponential growth rate since the month of March with its price value increasing by almost 300%. This has naturally brought comparisons with the 2017 crypto boom that saw the coin attain popularity.
Although there have been similarities between the bullish bitcoin of 2019 and the historical rise of that crypto currency in 2017.
There are notable differences in the diversity and importance of the investors in the two scenarios.2017 was the year that bitcoin gained worldwide notoriety. Since it came as a surprise to many how the coin could gain 1,900% increase.
This Phenomenal increase attracted both experienced traders and many who had never heard of it. Most people that jumped on the bandwagon had a common goal, which was to get the most value out of BTC, in the fastest possible way.
After the record high of December 2017, and the drop of more than 80% in 2018, BTC shows a marked upward trend in 2019.
The first big difference between the bubble of 2017 and the current rebound is in the degree of commitment shown by institutional investors in bitcoin, which has increased notably in two years.
There are two important institutional investment initiatives that were created or significantly increased in 2017.
The first of these is the Grayscale bitcoin fund (Grayscale Bitcoin Trust or GBTC) established by Barry Silbert in 2013, consisting of freely tradable shares, linked to the price of bitcoin.
BTC managed to outperform in 2017 conventional investment instruments such as gold-based funds, US Treasury bonds or industrial stocks.
Another important driver of the bitcoin price in 2017 was the announcement, at the end of October, of the launch by the end of that year of future contracts by the Chicago Mercantile Exchange, or CME Group.
This announcement caused a rapid rise in the price of BTC, as it was interpreted as the opening of large Wall Street investors to the bitcoin market.
It is not by chance that the maximum price recorded by Bitcoin ($20,000) occurred on December 17, 2017 which as the day that CME launched its first futures contract.
Winter and Recovery
The year 2018 was like a negative portrait of the previous year, as bitcoin lost more than 80% of its market value between January and December 2018. However, despite the crypto-winter, what was a long bearish period, the initiatives for institutional investment did not stop.
Only the GBTC fund accumulated more than 220,000 BTC last May, equivalent today to USD 2,400 million, close to 1.3% of the currency of that cryptocurrency.
In contrast to the crypto-winter, there is a sustained boom in the growth of the GBTC fund in the following chart, which shows the number of BTCs in Grayscale custody in the last 24 months.
Regarding the bitcoin futures, their progress has also been remarkable. A recent JP Morgan report estimates that in mid-June there was an estimated aggregate volume of $12 billion of CME and Cboe futures contracts.
This represented a jump from USD 5.5 billion in April and an average monthly USD 1.8 billion. JP Morgan’s conclusion is that the importance of bitcoin futures has been underestimated.
The current strength of bitcoin futures is considered key for bitcoin in this bullish rally, but its relative weight is higher in 2019 than it was in 2017.
Bitcoin Has Experienced More Longterm Initiatives In 2019
Another important institutional initiative is that of Bakkt, an exchange belonging to ICE Futures. The company is valued at 700 million has already announced the launch of bitcoin futures for the month of July.
In addition, to the rapid development of the futures market, other initiatives seem to give bitcoin a positive image to be integrated into different investment instruments, something that was not perceived in 2017.
For example, there are already retirement funds based on bitcoin and other cryptocurrencies . Bitcoin IRA the firm known for offering Bitcoin retirement funds services made a major announcement last week.
The firm has added to its portfolio a self-management option. This feature would allow the owners of retirement funds accounts to have total control over the money.
Another often overlooked difference between the two scenarios of the bullish bitcoin in 2017 and 2019, is that this year, BTC has been largely immune to negative news regarding the intervention of the SEC and other regulatory bodies.
This shows the growing confidence that investors and the crypto community have about the long-term applications of Bitcoin.