Bitcoin (BTC) June Rally: 5 Reasons It’s Different This Time
In the two years since BTC and digital assets came onstage, the market has significantly evolved, opening the way for both technological adoption and even more active trading.
Bitcoin (BTC) is unpredictable - this much is known. The coin usually makes most of its gains in a year within a short timespan, usually a few weeks. Since Bitcoin’s inception in January 2009, there have been a series of rapid spikes, followed by years of stagnation or a bearish price drop. But BTC has always recovered and made new highs.
While June 2019 has not seen a new high, with prices getting close to $13,000, such a move is not out of the question. While prices may still spike and crash, the most recent BTC rally is happening in a very different climate.
Mainstream Finance Giving a Second Thought:
While hardly anyone recognizes BTC as “money”, in 2019, it is certainly recognized as a new asset class. One of the attractors for mainstream investors is the appearance of custodial services. While the initial Bitcoin ethos was to keep the coins by controlling the private keys, experience showed that separate users were easily fooled, and wallet storage was not user-friendly enough. In 2018 and 2019, custodial services are expanding, offering good wallet practices and safekeeping. Coinbase Custody works for the adoption of BTC and multiple altcoins. Bakkt, the upcoming futures trading exchange, also offers a secure solution for investors who are not technically confident to transfer BTC directly.
Even Facebook Wants In:
The latest leg up of Bitcoin’s journey coincided with Facebook’s announcement of the upcoming Libra coin. While the new digital coin is not yet created, and its blockchain only a possibility, the adoption of a digital asset by one of the tech giants of the 21st century show a radical attitude shift to electronic cash.
It’s Safer and More Regulated:
In 2019, the BTC market is not a free-for-all anymore. Even peer-to-peer OTC markets require some form of identification, and anonymous trades are rare. At the same time, exchanges are taking pains to exclude regulatory uncertainty, and curb the possibility they would be used for money laundering and terrorist financing. The current actors and traders have been vetted over the past months, and most exchanges operate with almost full transparency. This also means that there probably won’t be any surprise regulation to frighten off traders. Exchanges have gone mainstream, and are much more diverse, offering robust volumes.
Traders Were Ready:
After a prolonged bear market, stretching from January 2018 until the tentative recovery in March 2019, disappointed traders largely abandoned the market. Volumes and price activity were especially stagnant in December 2019. But when the recovery showed signs of a more lasting trend, traders were ready at the sidelines. With 10 years of BTC history and several spike-and-crash cycles, there were more experienced traders to recognize the trends.
Mining Has Evolved:
A part of the skepticism around Bitcoin was the idea that the network was eating the world’s electricity. But a large portion of mining uses renewable hydroelectric power. In the past year, mining has evolved, making better use of Chinese hydroelectric resources. Mining machines are also coming online, providing efficient and profitable mining. This BTC price rally coincides with record mining activity at 64 EH/s. The upcoming reward halving in early 2020 is also a key price factor.
Together with all of the above factors, BTC is making advantage of the unprecedented quantitative easing by central banks. The recent BTC rally also coincides with a price spike in gold, not seen since 2013. BTC may be becoming more attractive as a potential store of value, even more attractive if the price shows the potential to peak at new record levels.