2021, despite all the ups and downs, has been a momentous year for bitcoin and the crypto community as they witnessed lots of records, much higher than double its 2017 all-time high. It is important to note that a lot has changed since 2017, which is why bitcoin’s 2021 bull-run is a whole different story.
Digital currency development from 2017 to 2021
First of all, bitcoin was treated differently in 2017, and it was not necessarily considered a long-term investment at all and was mainly used for trading altcoins and gambling. No wonder why!
It was the first time people in the world had any exposure to bitcoin or other crypto assets. Lack of experience and insight led most of them to frustration because they were ‘normal people,’ not ‘investors.’ That is another reason why capital flowing from fiat to bitcoin did not stay there and moved into literally every other cryptocurrency.
2021 is different because bitcoin is no longer used for trading and is not mainly viewed as a way to move capital into other assets, and it is serving its real purpose; a long-term investment. With more experienced investors, bitcoin market dominance is now more than double what it was back in 2017. It is interesting to know that over 15% of all bitcoin in circulation or over $30 billion, in other words, has been accumulated for the long term in the past two years, and almost 63% of all bitcoin has not been even moved in over a year now.
Why did digital currencies become so popular?
Another difference is that people nowadays tend to accumulate or ‘HODL’ their bitcoin for the long term instead of impulsively trading it. But what has made investors think before they act, buy dips and wait for the right opportunity? The inflation caused by the Coronavirus pandemic is one reason. With banks printing unlimited amounts of money and fiat currency losing value by the day, people would instead move to inflationary hedges and put their cash reserves into assets like bitcoin.
With the help of several infrastructure improvements, inflation, and the rising demand, bitcoin is evolving into an actual store of value and has caught big players’ attention, not ordinary people. That is another reason why 2021’s bullish cycle is far different from any previous one; unlike 2017, retail investors made changes to the market. Today, it is led by companies and, more importantly, institutional investors. Bitcoin is the big guys’ game now, and it has a lot of potentials.