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Neither speculative fever nor bubble, all the differences in bitcoin between 2020 and 2017


He has done it again. The bitcoin has fulfilled all the predictions that had predicted a new all-time high for the creation of Satoshi Nakamoto And it has reached it days before the third anniversary of that December 17, 2017, when it touched $ 19,900 on CoinMarketCap, but it was worth $ 21,000 on some platforms in South Korea. On December 1, 2020, this milestone has been passed, certifying what many observers had already advanced: that the graphs were nailed to those of a triennium ago. But beyond price action, numerous experts and analysts emphasize that the reasons that have supported both rallies separated in time are substantially different. They defend that this time there is neither bubble nor mere speculation.

Investors in the cryptocurrency market, especially those who have been enduring serious corrections and price floors for years such as 3,000 in 2018 or 4,000 dollars in March this year, “laugh heartily at the skeptics who once again charge against the last rally comparing it to the Dutch tulip fever, just like they did three years ago, ”says Edward Moya, an analyst at Oanda. They assure that this time it is different and "the race has been based on Long-term bullish institutional investors”, He explains and adds that“ the fundamental arguments are numerous and seem bulletproof ”. "Monetary and fiscal support will continue to be high in the short term and that is creating a diversification of trade not only against the dollar but also against gold."

Its adoption by payment giant PayPal – which followed in the footsteps of its rival Square – as well as its role in investment portfolios as a haven can offer diversification beyond other assets like stocks and bonds. "That has caused a huge increase in its value," says Adam Vettese, analyst at eToro. For now, its return this year is now over 170%, despite having had a slight decrease in the last hours. Also, experts continue to believe that it can go even higher.

This landscape contrasts with that of 2017 when bitcoin was largely driven by Asian investors who had just landed in the cryptocurrency market. Back then, the most traded of crypto currencies soon lost momentum due to ignorance of the asset and few real-life applications of the crypto currency, where it has never finished working as a payment method -one of the main reproaches made by his detractors. The same public that had fueled the FOMO (fear of missing out) began to question how attractive bitcoin was, apart from allowing easy speculation and payments of all kinds of illegal practices. And the fright of inexperienced operators began who fled in fear of losing the savings they had invested.

The bloodletting that followed the gargantuan high also had a lot of self-fulfilling prophecy. So much was said that it was a bubble worse than the tulip or dot-com bubble that it eventually burst. Instead, “three years later, the crypto industry has matured and is experiencing real traction with larger investors,” explains Vettesse. “They are using the cryptocurrency as coverage to combat the prospect of higher inflation and government stimulus continuous, ”he argues.

All this points to the current rally being fueled by a less speculative fever. Buyers are treating bitcoin as an alternative asset, putting into play the role of refuge that has been attributed to it in the past, that of digital gold, according to an analysis by data company Chainalysis. Rather than trading quickly with it, more investors are using Nakamoto's creation as a place to park part of their investment portfolios outside the influence of governments and the traditional financial system, Chainalysis elaborates. Purchases are now made "in more stable amounts for sustained periods of time, in a movement of transfer of funds from the bags that are kept as an investment", explains this entity.


Another key point is that the bitcoin boom has been accompanied by a bull market in all cryptocurrencies, whose total capitalization has reached a milestone close to 600,000 million dollars, as in 2017. While much of the fervor of three ago years focused on new coins from so-called initial coin offerings (ICOs), that many turned out to be scams, current interest has shifted to currencies attempting to participate in what is known as decentralized finance, or DeFi. These systems are intended to make it possible to obtain loans and insurance or collect interest without the participation of any financial institution.

Central banks in countries such as the ECB, the Fed, Singapore, Sweden and the Bahamas are also exploring the possibility of create national digital currencies -CBDC, from the English Central Bank Digital Currency-, inspired by bitcoin. While 70% of institutions are in a process of analysis on these currencies, according to the Bank for International Settlements, the People's Bank of China has already implemented a pilot program with the e-yuan and has the objective of replacing more than 12% of cash in circulation in 2022.

National digital currencies could eventually replace the current market, but there is a long way to go. What's more, you don't even know the fate of the bitcoin price that many place at $ 50,000 or $ 100,000. Moreover, historically speaking and during the rise in 2017, there were many counter-trend corrections after important bullish sections. Corrections that were approaching 40% in many cases and shortly after marking new all-time highs.

"This is how bitcoin moves when it says to do so," says José María Rodríguez, an analyst at Bolsamanía. "And we do not speak if finally, as it seems, it is able to surpass the historical maximums. How far can it go up? Nobody knows. The 100,000 dollars? … In reality, everything is possible in this underlying, ”he says. What is true is that months after each 'halving' bitcoin usually experiences stratospheric rises and everything points to it again.

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