MARKET

Former Wall Street executive Tone Vays: Bull market is just beginning

share
Former Wall Street executive Tone Vays: Bull market is just beginning

The price of Bitcoin continues to hit new highs this year. Former Wall Street executive and current blockchain researcher Tone Vays pointed out four major indicators to explain that this rebound is completely different from the "bubble" of 2017.

Table of Contents

BTC 2017/1/1 โ€“ 2019/6/24 Source: coinmarketcap

Many experts have pointed out that Bitcoin surpassing the key psychological price of $10,000 could trigger FOMO (Fear of Missing Out). However, Tone Vays disagrees and has presented four points, stating:

I actually don't think it's that significant. The $10,000 milestone didn't have any impact on the price in 2017. It doesn't seem to be slowing down the upward trend this year.

Institutional Involvement

Bitcoin's historic surge to nearly $20,000 in 2017 was mainly driven by retail investors. However, data from Google Trends indicates that searches for "Bitcoin" this year are only about 10% of those in 2017. In other words, the public is still in a wait-and-see mode, and retail FOMO has not kicked in yet, suggesting that Bitcoin's price could be much higher this time around.

On the other hand, demand for Bitcoin in the futures market is increasing. As of June 17, the open interest contracts on the Chicago Mercantile Exchange totaled 5,311 contracts, equivalent to 26,555 bitcoins or about $246 million, although still below the trading volume during the 2017 price peak.

Stable Network Fundamentals

On June 21, the hash rate hit a new all-time high, exceeding 65,000,000 TH/s. This means that Bitcoin is more secure than ever before and would require incredible computational power to impact the network.

BTC Hash Rate Source: blockchain.com

Furthermore, other on-chain data is in sync with the hash rate. Daily on-chain transaction volume, block sizes, and other indicators confirm that more people are using Bitcoin than ever before. Compared to 2017, network transaction fees remain relatively low, and off-chain scaling solutions like SegWit optimization and the Lightning Network help alleviate network congestion.

Bitcoin Mining Reward Halving in 11 Months

In May 2020, the Bitcoin block reward will halve, reducing the mining reward from 12.5 to 6.25 BTC, further slowing down the circulation of Bitcoin in the market. In response to this, a Bitcoin community analyst named PlanB shared his thoughts on Twitter:

If you believe Bitcoin will reach $50,000 in 2020, why wait?

Macroeconomic Environment

Morgan Creek co-founder Anthony Pompliano tweeted that with the European Central Bank lowering interest rates and the Federal Reserve hinting at delaying rate hikes, currency devaluation, continuous money printing, all of these factors will amplify Bitcoin's scarcity, stating, "Long Bitcoin, Short Bankers."

Therefore, for Bitcoin investors, the current situation may be quite optimistic as more people realize that Bitcoin's supply is fixed and transparent, and as the world's first neutral asset without a central authority, more investors are likely to shift continuously devaluing fiat currencies into Bitcoin.

Combining these four points: the historic BTC market cycle, increasing institutional interest, strengthening network fundamentals, and fiat currency devaluation, all could propel Bitcoin to surpass its 2017 price.

The author believes that just as the internet has had a profound impact on information, Bitcoin will also begin to have a greater impact on fiat currencies. Source

Related Reading

Join now to get the most complete information on financial technology, blockchain insights, and industry examples!