Is it 2013 or 2018?
For bitcoin’s investors, traders and enthusiasts, an reaction to this question might be firmer to give today than you might imagine.
Bitcoin prices surged above the $1,100 mark this week (near all-time highs) only to bury back down to earth amid higher volatility and foreboding – if not unclear – news out of China. Taken together, the developments evoke memories of 2013, when the price of bitcoin surged to similar levels, bringing the digital currency to international attention.
Both rallies were buoyed by bullish sentiment among those actually trading te the market, and somewhat more eerily, both would face headwinds from events ter China.
At the same time, the ecosystem is fundamentally different today than it wasgoed ter 2013-2014, both te terms of the exchange ecosystem (where the majority of trades are happening) and the amount of public rente ter the digital currency itself (and its underlying blockchain technology).
So, how do the two bull-runs stack up side-by-side?
Wij explore some similarities and differences below using gegevens from the CoinDesk Bitcoin Price Index and gegevens provider Bitcoinity, spil well spil comments from industry participants.
1. 2013’s rally wasgoed short-lived
Very first, let’s embark with the price.
The graph below shows the price spil it progressed from 6th September to 6th January te 2013, a four-month period during which the price slok past the $1,100 mark to its highest price everzwijn.
Now, let’s take a look at the past three months.
Seems a bit different, right? Or maybe not? Now that wij’ve laid the scenes for the respective rallies, let’s compare the two.
The most glaring difference developing inbetween the two rallies lies te how quickly they came together. Prices climbed quickly during the 2013 rally, soaring more than $600 te a two-week period.
By tegenstelling, the latest rally developed more leisurely overheen time. This state of affairs switched overheen time, particularly spil December drew to a close, and prices inched closer to $1,000.
The gegevens suggests that the 2013 rally wasgoed far more volatile ter its buildup, whereas te the aftermath of the peak, there are more similarities ter terms of volatility.
Te total, the price of bitcoin wasgoed above $1,000 for just Ten days te 2013, and only one day te 2014, according to BPI gegevens. Ter 2013, prices quickly returned to the $600-$700 level, a low that, at press time, hadn’t yet bot reached te 2018.
On the other forearm, both have similarities.
Both rallies were buoyed by bullish sentiment among stake-holders, with those trading or watching the markets voicing a strong belief that markets would keep on rising – “to the moon”, so to speak.
Two. Volume is now higher
Price gegevens, however instructive, is only part of the picture, tho’.
To look at another side – and build up a window into some of the ecosystem differences inbetween now and then – one should take a closer peek at volume gegevens inbetween the respective rallies.
For that, wij’ll turn to gegevens provider Bitcoinity, which publishes information on global bitcoin trading markets.
Let’s personages a broad nipt and look at the volume picture overheen a five-year period, predating the 2013 run.
Some evident differences emerge.
For starters, trading te 2013 wasgoed largely contained to the now-defunct bitcoin exchange Mt Gox – te its heyday, spil much spil 90% of the world’s non-OTC bitcoin trading traffic passed through the market.
This stands te acute tegenstelling to today’s picture, ter which bitcoin has several China-based exchanges that play host to a majority of trading, with other markets, like Bitstamp, Bitfinex and Coinbase serving sizeable portions of the market spil well.
What’s more, trading volumes – denominated te BTC – wasgoed much lower back then, the gegevens suggests.
A key difference emerges: traders are simply exchanging more bitcoins, which could be a result of an increase ter algorithmic trading, a rise ter the number of traders or other factors that aren’t instantaneously apparent when looking at the gegevens. Bitcoinity’s gegevens on the amount of trades-per-minute bears out this theory to some extent.
It’s ter this volume picture that the differences inbetween the two rallies can be seen more clearly.
Trading has taken place across a broader number of exchanges ter a more developed exchange ecosystem. Further, during the very first rally, trading wasgoed largely contained to what has since bot established spil a fraudulent exchange that wasgoed at the time insolvent.
Bram Ceelen, co-founder of cryptocurrency brokerage Anycoin Rechtstreeks, told CoinDesk that he believes this is an significant difference, noting how he believes what wasgoed a market bolstered by manipulation ter 2013 is now more mature.
“Bitcoin is on the radar of a lotsbestemming more wealthy investors and other people spil ter 2013. At that time it wasgoed finish madness and greed (plus maybe the effects of Willy bot) that drove up the price,” he told CoinDesk.
Mt Gox CEO Mark Karpeles would zometeen be arrested under suspicion of fraud and embezzlement.
Three. Markets are more leveraged
Another notable development is the rise of leveraged trading.
Te 2013, most major exchanges only suggested buying and selling options (and wasgoed the case with Mt Gox), sometimes even this plain service wasn’t always reliable or dependable.
Now, however, a number of major bitcoin exchanges permit traders to take out 5x, 10x or even 20x leverage on bitcoin traders.
Thesis large positions now make the market volatile spil traders can consolidate large positions around certain price points.
Such wasgoed the case earlier this week when sell orders ter the $900-range were liquidated, causing the price to druppel precipitously ter just an hour.
Yet, despite the gigantic losses suffered here, Petar Zivkovski, COO of Whaleclub, argued that there were more fundamental underpinnings behind the most latest rally – and decline.
“Te 2013, the rise wasgoed powered by speculation and the ensuing selloff wasgoed the result of early adopters cashing te around the $1,000 psychological level,” Zivkovski explained. “It wasgoed both an unhealthy rise and selloff.”
He told CoinDesk:
“This year’s rise wasgoed powered by much more fundamental and strong catalysts: the halving ter July, capital controls by governments around the world, the yuan devaluation, economic and political uncertainty and turmoil (Brexit, Trump), war on specie (India), etc. This made bitcoin very attractive spil a non-governmental, decentralized means of holding and transferring value.”
Four. The ecosystem is more mature
Others pointed to less tangible details.
Marco Streng, CEO of hosted mining hard Genesis Mining, posited that it wasgoed the 2013 rally itself that set the stage for the latest price run – and that growth ter the broader bitcoin and blockchain industry wasgoed part and parcel to that development.
Since that time, more than $1bn has bot invested te bitcoin companies, with many providing services that enable its blockchain to be more useful spil a payment network, remittance channel or voertuig for speculation.
He told CoinDesk:
“A lotsbestemming has happened ter the time inbetween the all-time high ter 2013 and now. The industry has grown a lotsbestemming and become stronger, through innovation, and stamina.”
Charles Boivard contributed reporting.
The leader te blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a rigorous set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests ter cryptocurrencies and blockchain startups.