The plunge did not come as expected, and the current round of Bitcoin's rise has lasted longer than the previous peak

Source: Global Forex Network

After approaching $20,000 in 2017, the price of Bitcoin finally broke through this mark again at the end of 2020.

The price of Bitcoin has more than tripled this year, but unlike previous surges, this round of Bitcoin's rise lasted longer - 24 days ago, Bitcoin hit a new all-time high after three years, and then continued to climb, reaching a high of $24,273 last Sunday.

On Wednesday, Bitcoin closed at $23,299. Over the past week, Bitcoin has been consolidating between $23,000 and $24,000.

Prior to this, Bitcoin had only closed above $19,000 once and above $18,000 just three times.

Compared with the current rally, 24 days after the last record high, Bitcoin fell 29%, and the decline was as high as 38%. 31 days after reaching the peak, the price of Bitcoin was less than $10,000, a drop of nearly 50% from the high point. In the next two years, Bitcoin has been sluggish.

There is no doubt that the market has changed dramatically in the past three years, judging by the factors driving Bitcoin's rise and the period of time after the price hits a new high.

☆The upward trend is more reliable

Bitcoin bulls say the money driving the cryptocurrency’s gains this year is coming from more reliable sources than in past rallies. New large investors have bought a total of about 500,000 bitcoins worth about $11.5 billion since September, according to data from analytics firm Chainalysis, which tracks the holdings of investors with at least 1,000 bitcoins in their wallets for less than a year.

This year, notable Bitcoin buyers include billionaire investors Paul Tudor Jones and Stanley Druckenmiller, as well as companies such as Square Inc. (SQ), Microstrategy Inc. (MSTR) and Massachusetts Mutual Life Insurance Co.

There are also more small and medium-sized buyers. According to Chainalysis data, more than 38 million bitcoin transactions have been transferred to personal wallets with a single amount of less than $1,000 so far this year, nearly double the 20 million transactions in 2017.

“This bull run feels very different,” said Pascal Gauthier, chief executive of cryptocurrency hardware maker Ledger. “In 2017, there was a crazy bull run led by retail investors. This time it’s for real.”

Bitcoin's backers hope the industry has grown enough to handle its newfound wealth. The cryptocurrency was originally designed as a digital version of cash that is not controlled by governments or banks. Its software runs on a network of interconnected but independent computers. Anyone can download and run the program and become part of the network, but no one party has the power to make unilateral changes.

This decentralized structure makes Bitcoin an attractive asset for those who want to quickly and cheaply move money across borders, avoid government regulation, or simply hold an asset that is not tethered to the value of the U.S. dollar.

Bitcoin’s gains have also drawn regulatory crackdowns that have dampened investor enthusiasm, such as the Securities and Exchange Commission’s crackdown on initial coin offerings in 2017. Bitcoin’s rally that year was fueled in part by investors’ frenzy over ICOs, in which startups and offerings raise money by creating and selling their own digital coins. ICOs raised more than $4 billion in 2017 before the investment frenzy died down. Most projects were ill-conceived, poorly designed or outright fraudulent. Regulators cracked down. Only a few survived.

This year, there has been more regulatory clarity on cryptocurrencies. Agencies such as the SEC and the Internal Revenue Service have developed standardized rules for cryptocurrencies.

Of course, despite the increasingly bold predictions surrounding bitcoin’s price, which fell as much as 12 percent from its Dec. 1 high before rebounding, savvy industry insiders are wary of the currency’s sometimes wild swings and surges, and say its well-known volatility has not gone away.

“We are not in a bull market cycle yet, and we clearly don’t think we are going to have a bear market, either,” said Mati Greenspan, founder of research firm Quantum Economics.