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What Instigated The Bitcoin ATH in 2017? What’s the Difference Now?

Bitcoin had traditionally displayed a very volatile trading chart since it was created in 2009. The coin has witnessed lots of price action in its short existence period. Bitcoin’s first substantial price boom occurred in 2010 when the coin’s valuation increased from around $0.0008 to $0.08 in a single day. 

Since its creation in 2009, Bitcoin has witnessed significant price rallies and crashes, with the price surging by 150% in 2020 alone during the COVID 19 pandemic. But perhaps one of the most historical Bitcoin price rallies occurred in 2017, where Bitcoin’s market price rallied from under $1 000 in January to over $ 19 000 in December 2017 before correcting sharply. 

2020 has also been a good year for Bitcoin, with prices breaking its ATH price of $19 891 and shattering the 20K strong resistance level. But what led to the Bitcoin ATH in 2017, and how is it different now? Here’s an in-depth analysis. 

2017 Bitcoin Price Analysis 

The start of 2017 was a challenging year for Bitcoin, with the price trading between $930 and $978. The digital currency crossed the $1000 resistance level on New Year’s Day, raising investors’ hopes for a possible bull run. 

Harsh regulatory frameworks soon caused the prices to fall. China, through the People’s Bank of China, tightened the regulatory frameworks regarding the Bitcoin exchanges. Following the regulations, there was a substantial drop in trading volume. 

Three of the established Bitcoin exchanges, including Huobi, OKCoin, and BTCC, raised the trading fees and soon stopped Bitcoin withdrawals, and halted fiat trading following additional restrictions from Chinese regulators and directions by PBoC. 

The U.S. Securities and Exchange Commission (SEC) also failed to approve Bitcoin exchanges, contrary to most investors’ expectations. This caused a 30% drop in Bitcoin prices in a single day before recovering above $1 000 after the initial drop. 

In the summer of 2017, Bitcoin experienced substantial bulls with the prices breaking past crucial support levels. For instance, on May 1, Bitcoin broke past the $1 400 level, recording the highest price in its history at that time.  

By the end of May, Bitcoin had rallied past $2 000 for the first time in history and rallied towards $3 000 in a matter of weeks. Despite the significant bulls, the prices were never stable and were quite volatile, losing up to $300 in an hour. 

As of September, Bitcoin’s price had exceeded $5 000 in history, only to lose a couple of dollars in the days to come. The weeks following the $5 000 price level saw Bitcoin experience a reversal rally falling below $3 000 on September 15. 

By mid-October, Bitcoin’s prices had rallied again, this time past $5 000. Despite harsh regulatory policies and the closing of three major Bitcoin exchanges, the coin was on a bullish trend, which set it for a major price rise in November and December. In December 2017, Bitcoin continued its upward trajectory climaxing with an all-time price of $19 783.21 on Dec.

The price was about to break the $20 000 level but was met with a sharp correction that witnessed the prices drop by 30%, with prices plummeting below $11 000. This was one of the most significant corrections in Bitcoin’s history. In the coming days, Bitcoin would recover to $16 000 before dropping again to under $13 000 on December 28 

What Led to Bitcoin’s Substantial Price Raise?  

While the cause of Bitcoin’s enormous price rally in 2017 is not clear, the most probable cause, according to research, was market manipulation by a Bitcoin “whale.” According to research by John Griffin-a University of Texas professor, and Amin Shams-an, an instructor at Ohio State University, Bitcoin’s enormous price rally in 2017 could be due to crypto whales using Tether to bolster the price of Bitcoin following bearish markets. 

The responsible crypto whale used Bitfinex to manipulate Bitcoin. The professors studied Bitcoin and Tether transitions dating March 1, 2017, to March 31, 2018, establishing a suspicious pattern where Bitcoin purchases on Bitfinex increased every time Bitcoin’s price dropped by a particular value. However, Tether’s general counsel Stuart Hoegner quickly refuted the claims stating that the investigations used insufficient data. 

Bitcoin ATH in 2020 

Like in 2017, Bitcoin has also displayed an enormous price rally this year amidst the COVID-19 pandemic. The digital currency displayed an unexpected bull run even with the U.S. election 2020. Bitcoin has recorded its all-time high of around $20, 000 and its performing better than expected. 

Bitcoin started the year at around $7 000 and has doubled in value thanks to growing demand. Bitcoin has already broken the ATH price of $19, 891 and its trading at $20 717 at the time of writing. This is the first time the digital currency is trading at such a price level since 2017. 

Bitcoin ATH Now and Then-What’s the Difference 

The current Bitcoin market is very different from the market in 2017. To begin with, the market has become more mature and robust. As of 2017, no public or private companies had purchased Bitcoin as an investment. 

2020 has seen renewed Bitcoin interest from prominent investors and Wall Street, who view Bitcoin as a safe haven to hedge assets against inflation. Bitcoin’s current ATH is very different from the 2017 extreme bullish run. In 2017, Bitcoin’s price rise was linked to Asian investors who had just learned about cryptocurrencies and were not very sure of investing in it.

Bitcoin’s public reputation was also damaged with the suspicion that the digital coin was used to fuel online fraud and facilitate illegal payments thanks to its anonymous nature. On the contrary, Bitcoin’s current ATH is being fueled by a less speculative theory with American investors, including large corporations and traditional investors, regarding Bitcoin as the “modern gold” to hedge their assets against extreme inflation. 

The fact that cryptocurrencies are being made a little bit safer has attracted a new set of investors, including Wall Street investors. This has led to extreme Bitcoin demand, thus the enormous price rise. Unlike the 2017 bullish run due to retail investors, the 2020 Bitcoin ATH is being fueled by professional investors, institutional investors, companies, and hedge funds. 

While a price correction was expected as the case in 2017, the price action may be strong enough to overcome a significant price correction since Bitcoin has gained a reputation among investors as a legitimate investment vehicle.    

Conclusion

Bitcoin has displayed a robust bullish run in 2020, breaking its ATH price of $19 891.  The digital currency is currently trading at its all-time high price of $20 700. 

Bitcoin’s price rally in 2017 is very different from this years’ bullish trend. Unlike in 2017 where the market was less mature and run by speculative Asian investors, the Bitcoin market has matured, attracting hedge funds, professional investors, and companies looking to hedge their assets from inflation. 

Bitcoin is currently being viewed as modern gold and has gained an excellent reputation among investors. As such, while a price correction is very likely, it may not be as intense as the one witnessed in 2017, where prices fell from $19 500 to $11 000 in less than a week. Nonetheless, Bitcoin is a highly volatile currency, and thus you ought to trade with caution to avoid losing your entire investment.    

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