Bitcoin reached a new all-time high (ATH), selling for roughly $19,729 this Monday morning on multiple cryptocurrency exchanges.
There are many opinions about the precise dollar value of the last record high in late 2017, up to $20,093 on BitMex. According to Kraken exchange employee Dan Held, bitcoin reached an ATH of $19,600 on his platform before noon on Monday. Likewise, Gemini exchange co-founder Tyler Winklevoss tweeted bitcoin hit an ATH of $19,833.
Regardless, the dollar-denominated price of bitcoin generally peaks near the end of the year, going back to a previous record-breaking high of around $989 on November 25, 2013. Likewise, the next bull run — when the price spikes and trading activity surges — took off in September 2017 and peaked in December. It’s now roughly three years later, between Thanksgiving and Christmas, right on time to pump again.
There is a difference between the current bull run and earlier ones, however. As Island Castle Ventures co-founder Nic Carter told Bloomberg, the 2020 market surge is distinguished from the rest because the tech companies serving the industry are seen as mature enough to handle institutional capital. These days, companies like Bakkt and Fidelity operate institutional bitcoin trading and trading products like bitcoin futures. Along those lines, Forbes reported this month that the blockchain analytics firm Chainalysis is now fundraising with a $1 billion evaluation.
Stepping back, the Silicon Valley exchange Coinbase became one of the first crypto industry “unicorns” during the 2017 bull run. Coinbase was previously a Chainalysis customer, but pivoted to developing in-house analytics over the past year. Though Coinbase had a tumultuous year marked by public controversy, so far it appears the leading bull market unicorns are surveillance tech companies.
All things considered, Carter told Motherboard in an email the pandemic’s political factors create a near perfect storm in 2020 for the bitcoin-as-a-hedge investment thesis. This thesis argues bitcoin offers a hedge against inflationary currencies and political instability, despite clear instances of correlation between bitcoin’s volatility and the stock market and the Dow Jones Industrial Average this year.
“I’m seeing more chatter about ‘high velocity’ monetary issuance (i.e. fiscal rather than monetary), going directly into the ‘real economy’ rather than being trapped like QE (quantitative easing) is. This is potentially inflationary,” Carter said, expressing concerns that the upcoming Biden administration will be “pro stimulus.”
On the other hand, bitcoin’s fiat-denominated price continues to climb—even in markets without access to American banks, such as Iran—because the vast majority of buyers believe cryptocurrency is on the cusp of “mass adoption.” In fact, 92 percent of 15,000 Crypto.com survey respondents said cryptocurrency could achieve “mass adoption” in “the next five years.” These crypto fans expect average consumers to use cryptocurrency as often as they might use banking apps or Venmo. This narrative is as old as bitcoin pumps and hype cycles, however, which is to say as old as the technology itself. Today the daily average shows under one million active bitcoin addresses.
So far, the legal infrastructure surrounding the nascent bitcoin industry is still gridlocked. The Virtual Currency Tax Fairness Act, which would allow Americans to use crypto for small trades and purchases without cumbersome paperwork, hasn’t gotten any traction in congress since January 2020. Unless the compliance landscape improves, routine transactions with self-custodied assets may remain niche. Neeraj Agrawal, a spokesperson for the nonprofit crypto research group Coin Center, told Motherboard “we remain hopeful that those in government will see growing interest and adoption of cryptocurrency is making this particular [issue] more pressing.”
There are solid reasons why many experts remain bullish on bitcoin’s fiat-denominated price.
“Bitcoin is a 0-yield asset, which looks good by comparison [to fiat currencies],” Carter said, arguing service providers like PayPal could achieve the same “mass adoption” bottomline.
“Bitcoin ultimately scales with capital, not individual users,” Carter added. “So as long as there is capital willing to deploy into a new monetary system, it can keep monetizing for a long period.”
Leigh Cuen is a reporter in New York City. Her work has been published by Business Insider, Newsweek, Teen Vogue, Al Jazeera English, The Jerusalem Post, and many others. Her small crypto holdings are worth less than a designer purse. Follow her on Twitter at @La_Cuen._