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Decoding the Bitcoin Bull Run

by icosuccess
, Decoding the Bitcoin Bull Run

What was the springboard to bring the bull run back to Bitcoin? Was it the Streisand effect in India; Facebook’s Libra coin launch? Is it just the feel-good positive investor sentiment? Bitcoin crossed $11,000 this weekend and there has been speculation of it crossing the $20,000 line. The last time Bitcoin traded within this range was early March 2018. The increased demand for Bitcoin was reflected on Indian cryptocurrency exchanges as Bitcoin was trading at a $500 premium in India.

In the crypto meltdown of 2018, billions of dollars melted off the market cap within 2 weeks, but all this changed in April 2019 with Bitcoin’s price rally to $6,000. The famously volatile asset attracted more attention in last weekend’s surge to $11,000. A fresh wave of buyers are now entering the market and institutional support for Libra coin has created more hopefuls than December 2017’s bull run.

It is challenging to point to a single factor to the sudden rise in prices, let’s explore a few reasons here.

Growth snowballs faster

An uptrend in prices gets the ball rolling to the moon. Yale doctoral students discovered that a price hike has a momentum effect that pushes the price even higher. There is a positive linear association between the number of wallet addresses and the price of Bitcoin, indirectly correlating its to adoption. As Bitcoin adoption increased, so did the returns in the past 6 months. Positive tweets encourage more traders to get involved and this subsequently boosts the price.

Altcoins have underperformed in 2019

Bitcoin’s market dominance has been over 50% since 2017 and investors have been exploring new opportunities for investment. While altcoins posed as a great opportunity for investors to make profits faster and more consistently, market indicators show that throughout 2019, altcoins have mostly underperformed. They’re losing market share and investors’ confidence. Bitcoin’s dominance, however, is rising again, and this time it’s approaching 60% of the market cap.

Institutional investors are interested

Crypto funds have been attracting significant investment from institutions. Reportedly, crypto projects and companies have received over $200 million in investment in 2019 alone. With Facebook’s Libra coin set to launch by early 2020, institutions are investing more aggressively than before. Whether this is FOMO or sound investment is yet to be determined.

Bitcoin reward halving is coming

Bitcoin block reward halving is set for May 2020 and that would reduce the number of Bitcoins to half. What’s important to understand is such an event occurred in the summer of 2016, a year before the historic bull run. This gives us more reason to conclude that this bull run isn’t stopping – even at $20K.

Technical and network fundamentals are strong

For the time being, Bitcoin is more secure than ever before. It would require an impossibly high amount of computing power to attack the network, and the hash rate has hit a new all-time high. The transaction volume has been increasing steadily and the network fees are relatively low compared to 2017.

None of these factors are single-handedly responsible for the bull run but they are working together and accelerating the pace of the price rally. This also indicates that continual growth is no longer a a pipe dream – this is reality. Bitcoin’s price rally indicates positive sentiments for cryptocurrency adoption. Have you opened a digital wallet yet?


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