Opinion: Bitcoin's rise feels like 2017, but it's not exactly the same

Bitcoin has risen 60% since May this year, reminiscent of the exciting soaring 2017, when cryptocurrencies became part of the public mind. But despite the current price hikes, the public's sentiment is not as high as it used to be.

In December 2017, Bitcoin, the world's largest cryptocurrency, became a hot topic on the table, and Google's search for "Bitcoin" increased fivefold. According to Archive.org, Reddit's Bitcoin subgroup has nearly 19,000 registered at that peak, and today the number is about 11,000.

At the time, a post on r/Reddit "Bought at $19,500 AMA (purchasing AMA for $19,500)" received 1,044 comments. Today's post claiming "The big $12k Bitcoin" is only 285 comments.

Bitcoin historical price trend chart, green tends to be the upward trend since 2019. Source | Bloomberg

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In 2017, this excitement sparked a fanatical interest in blockchain. Dozens of penny stocks By adding this term to their names, stock prices have risen sharply. The Chicago Board Options Exchange has launched Bitcoin futures, and Wall Street veterans such as Michael Novogratz have hailed Bitcoin as the currency of the future. Of course, this time, the real Bitcoin believers are also very excited. But the grand occasion that made Bitcoin a household name 18 months ago is no longer there.

Will McDonough, CEO of blockchain technology company Diginex Americas, said: "I think the situation is different. The 2017 rise is good for the entire ecosystem, and it has brought more people to this asset class. (This time) I think institutional investors, wealthy individuals, family offices – they don't have much to invest in blockchain channels, and the easiest thing for them is bitcoin."

Price manipulation

A new paper from the Pacific Northwest National Laboratory says public enthusiasm on sites like GitHub and Reddit may not be a good sign for price. The authors of the paper, Maria Glenski and Svitlana Volkova, created a model that predicts the price of Bitcoin one day in advance with a margin of error of 4%.

Glenski said in a telephone interview: "You can link what happens on social media to price volatility." Researchers are currently studying the spread of false rumors on platforms such as Twitter, and how these rumors are used as a pull The price is manipulated by means such as pump-and-dump schemes.

This kind of error message is very embarrassing. For example, Twitter user @Crypto_Bitlord posted on Wednesday that "the Bitcoin ETF has been approved" – this false information received 3,600 likes.

False information posted by Twitter user @Crypto_Bitlord: "Bitcoin ETF has been approved"

It is important to know that some experts, such as John Griffin, a professor of finance at the University of Texas at Austin, believe that half of Bitcoin's rise in 2017 is the result of market manipulation. In particular, he pointed out that the use of the stable currency Tether is the culprit. In May of this year, the owner of the Tether company raised $1 billion by selling a new token called Leo.

Of course, there are some good news to make the bulls happy. Square announced on Wednesday that users can store bitcoin in their Cash app. Social media giant Facebook Inc. just announced its entry into the encryption space.

But in general, despite a lot of good news and recent price increases, consumers are still tired of the price collapse of more than 70% in 2018. A SophisticatedInvestor.com platform survey of 2,000 Americans over the age of 18 found that only 4.6% of consumers have confidence in cryptocurrencies as an asset class. In fact, trust in cryptocurrencies is much lower than any other type of asset, including real estate and commodities.

Regardless of market sentiment, the fundamentals look different. According to data from Blockchain.info, the current transaction volume is 16 times lower than the historical high of December 2017.

Although Bitcoin experienced similar price increases between November and December 2017, CryptoFundResearch CEO Josh Gnaizda said in an email: "After 11 days of the above period, the price of Bitcoin reached 2 The historical high of over 10,000 dollars, and then began a long decline."

Above, the price trend of Bitcoin on June 26, 2019. Source | Bloomberg

Author | Olga Kharif

Source | Bloomberg

Compile | Jhonny

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