When it comes to Bitcoin, we’re in the midst of a price surge not seen since the famous bull run of late 2017. Below, we outline the underlying conditions driving Bitcoin’s price increases now, and explain some of the key ways they differ from the conditions of 2017.
Bitcoin’s price is rising because demand for Bitcoin is increasing at a time when there’s relatively few Bitcoin available to buy. While the total supply of Bitcoin grows every day as more is mined, the actual amount available to buy depends on whether holders want to sell or trade it.
We quantify this by tracking the amount of Bitcoin held in wallets that send less than 25% of Bitcoin they’ve ever received, which we refer to as illiquid or investor-held Bitcoin, versus Bitcoin held in wallets that send more than that, which we refer to as liquid or trader-held Bitcoin. .
Right now, the amount of liquid Bitcoin is similar to what it was during the 2017 bull run. But the amount held in illiquid wallets is much higher, currently representing 77% of the 14.8 million Bitcoin mined that isn’t categorized as lost, meaning it hasn’t moved from its current address in five years or longer. That leaves a pool of just 3.
4 million Bitcoin readily available to buyers as demand increases. Trade intensity, which measures the number of times each Bitcoin deposited on a spot exchange is traded within that exchange before moving off the platform and is a good proxy for demand on a given exchange, is currently 38% above the 180 day average.
The key difference lies in who’s buying Bitcoin and why. In 2017, most demand came from individual, retail investors buying with their own personal funds.
NOTE: WARNING: Investing in Bitcoin is a high-risk venture and its prices can be highly volatile. It is important to do your own research and consult a financial advisor prior to investing in Bitcoin. There are no guarantees that the price of Bitcoin will continue to go up, and it could potentially drop significantly in value. Be sure to invest only what you can afford to lose and never risk more than you can comfortably afford.
2020 is the year institutional dollars began flowing into Bitcoin. From high-profile investors like hedge fund manager Paul Tudor Jones, who compared buying Bitcoin to investing early in Apple or Google, to corporations like Square, which invested $50 million or 1% of its total assets in Bitcoin, mainstream companies and financial institutions are turning to Bitcoin.
The institutional move into cryptocurrency appears driven by a desire to hedge against macroeconomic uncertainty, which of course hasn’t been in short supply this year. Jones himself put it well, saying, “Back in March and April, it became really apparent, given the monetary policy that was being pursued by the Fed, other central banks and fiscal policy around the world.we were in an unprecedented time.one had to begin to think about how you defend yourself against inflation.
The data bears out this institutional investment story as well. For one thing, we’re seeing an increase in high value transfers sent from exchanges in 2020.
Bitcoin’s price is rising because demand for Bitcoin is increasing at a time when there’s relatively few Bitcoin available to buy.
We quantify this by tracking the amount of Bitcoin held in wallets that send less than 25% of Bitcoin they’ve ever received, which we refer to as illiquid or investor-held Bitcoin, versus Bitcoin held in wallets that send more than that, which we refer to as liquid or trader-heldBitcoin.
Right now, the amount of liquid Bitcoi.
8 Related Question Answers Found
Bitcoin has seen a surge in interest and investment over the past year. This has led to a corresponding rise in price. But what is causing Bitcoin to rise?
Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009.
When it comes to Bitcoin, there are a lot of misconceptions out there. People often think that Bitcoin is just a digital currency, used to buy and sell things online. However, there is a lot more to Bitcoin than meets the eye.
Bitcoin is often lauded as an innovative breakthrough in the digital age, and for good reason. The cryptocurrency is decentralized, global, open-source, and borderless. But what exactly is Bitcoin, and why does it have any value?
Bitcoin is often referred to as a digital asset, but what exactly does that mean? A digital asset is a type of file that can be stored on a computer or other electronic device. Bitcoin is a digital asset because it can be stored on a computer or other electronic device in the form of a file.
Bitcoin was created in 2009 as a digital asset and a payment system. It is the first decentralized cryptocurrency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly, without an intermediary.
Bitcoin is a cryptocurrency, a form of electronic cash. It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
Bitcoin, the decentralized digital currency, is crashing. The value of a single bitcoin fell to as low as $9,000 on Friday morning, a drop of more than 25% from its Thursday high of $11,879. The sell-off was widespread across the cryptocurrency markets, with most major coins down by double-digit percentages.