Will bitcoin’s 2017 rally bounce back in 2020?

Experts say the current bitcoin rally is fundamentally different from 2017

By Anna J. Park

Will 2020 end as another historic year for bitcoin? Many investors and market watchers are asking themselves this question, observing the remarkable upward movement of the cryptocurrency that has continued over the past three months.

The current bullish trend reminds market watchers of 2017, when the price of the virtual currency started at around $ 900 in January to climb to its all-time high of $ 19,783.06 in December.

This year alone, bitcoin has risen nearly 150 percent since the start of the year when it was trading at $ 7179.96. At around 2:00 pm local time on Wednesday, the cryptocurrency price hit $ 18,417.70, approaching the record set in the winter of 2017. But the price fell back to around $ 17,630.30 an hour later.

As prices are volatile – shown by the sudden drop on Wednesday afternoon – it is still too early to tell whether bitcoin will be able to beat its previous record high and continue its rally by the end of the year. While some experts say the cryptocurrency will become worth around $ 1 million over the next decade, no one can be sure of the future of the cyber currency.

Bitcoin embraced by major financial institutions and authorities

However, what’s obvious is that cryptocurrency has become increasingly recognized in the financial sector in recent years – one of the reasons insiders say the current rally is fundamentally different from that of 2017, when the coin’s price. plunged after hitting the close. to $ 20,000.

The main difference this year compared to three years ago is that bitcoin is more often considered a traditional asset just like the dollar or gold in its function by institutional investors and authoritative financial experts. For example, New York University Professor Nouriel Roubini – one of bitcoin’s most famous critics who once referred to cryptocurrencies as “scams and bubbles” – finally admitted bitcoin’s function of storing value earlier this month.

Global financial firms such as JP Morgan and Fidelity have launched digital asset services, while Citi and Goldman Sachs have released analytics reports, claiming that cryptocurrency is the gold of millennial investors.

This year alone, bitcoin ranked as the # 1 asset that saw the largest increase in value. The cryptocurrency has also proven to have value amid the uncertainties created by the pandemic and excessive liquidity, while the dollar and gold, typical safe assets, are losing value.

“While we remember bitcoin’s mad rush to the upside in 2017 and the steepening price of the coin the following year, some expected the current upward trend to end soon. But the economic situation is very different from that year.” , Han Dae-hoon, an analyst from SK Securities, pointed out.

In his latest analysis report released Wednesday, the analyst explained the current bull run with three reasons.

First, the devaluation of the currency resulting from global liquidity supplies and a weakening of the dollar have strengthened the value of bitcoin. Second, wider acceptance of decentralized finance (DeFi) has encouraged investors to aggressively opt for digital assets with greater confidence. Finally, cryptocurrency is now being treated as a major asset by institutional investors. The introduction of digital currency payment services by major global payment companies such as PayPal and Square has also facilitated the current upward movement.

“JP Morgan has begun providing banking services to global coin exchanges and Fidelity currently offers custody service with the authorization of the New York Department of Financial Services. DBS Bank of Singapore announced its plan to open DBS digital exchanges. “states the analyst’s report. “Their shared position is that the quick move to embrace cryptocurrency is a must, considering the growing demands for currencies from VIP customers and millennial investors, as well as the rosy prospects for the development of digital finance in the future.”