It is fair to say that the past 12 months have been the most turbulent in the life of Bitcoin. The popular cryptocurrency has seen incredible growth, but also incredible losses of value. This instability has caused many people to question whether cryptocurrency has a future at all.
However, in the midst of the sell-offs and the people dismissing Bitcoin as little more than a bubble, there are signs of optimism. Many knowledgeable people have predicted Bitcoin’s value will surge again, and could potentially even enjoy a “bull run”.
What is a bull run?
A “bull run” is a term taken from the stock market, but it applies to cryptocurrency with much the same meaning. There are two nicknames used for current trends in the stock market:
- A “bull” market, where the market is rising and value is increasing
- A “bear” market, where the market is falling and valued is decreasing
Bull market or bull run is therefore extremely good news. It is a sign of confidence in the market, and those already invested will usually see excellent returns during this time.
Bitcoin’s most notable bull run
Bitcoin has enjoyed a number of bull runs in the past, but the most notable began in 2016.
- In November 2016, one Bitcoin was worth $742.01
- In December 2016, one Bitcoin was worth $968.23
Bitcoin had been prospering in the months prior to this sudden leap, but November to December 2016 saw a sudden spike. However, the market was still relatively stable; the rises kept coming, but at a fairly reasonable rate. For example, by April 2017, one Bitcoin was now worth $1349.49 – a substantial increase, and a burgeoning bull run – but then the price really began to rise.
By August 2017, one Bitcoin was worth $4764.87. There was then a slight downfall to October, but then the market truly enjoyed a spectacular bull run. Just two months later, in December 2017, one Bitcoin was worth an astonishing $13,860.14 – over $12,000 more than it had been just 12 months before.
What goes up, must come down
Even at its peak, most Bitcoin investors knew that the currency would eventually have to stabilize – the increase had been so dramatic that some adjustment would be necessary. For every bull run any market has enjoyed, there is a matching bear run; this is just the nature of investments.
However, the adjustment was more substantial than people expected. By June 2018, the value of one Bitcoin had fallen to $6387.31. There were a number of reasons for this, with arguably the biggest influencing factor being South Korea’s decision to ban cryptocurrency trading in January 2018. This led to the start of the long fall from the dizzying heights of December 2017 to the comparative-lows of June.
However, as disastrous as $6387.31 looks from highs of over $13,000, it is worth noting that the year-on-year growth is still impressive:
- June 2017: $2504.28
- June 2018: $6387.31
This year-on-year comparison makes it clear that Bitcoin still has something to offer to investors. It’s down, but it’s not out.
Did Bitcoin have a ‘bubble’?
First and foremost, it is important to understand what happened to Bitcoin at the end of 2017. Many people have speculated that Bitcoin fell into a ‘bubble’ scenario; an unsustainable state of growth that will then burst and collapse.
In some ways, Bitcoin’s 2017 finish was a bubble, in that it expanded very quickly. It also appears to be a bubble in that it ‘popped’ at the beginning of 2018. However, dismissing Bitcoin’s sudden surge as a bubble is a rather simplistic interpretation. Historically, bubbles grow from very little, expand massively, pop under their own weight, and then fade back into mediocrity. This hasn’t happened to Bitcoin; as we have seen it has sustained an excellent level of year-on-year growth. It is also worth noting that poor regulatory news from South Korea ‘popped’ the Bitcoin ‘bubble’ – but this is not a conventional pop. As mentioned, bubbles tend to pop under their own weight; the Bitcoin bubble popped for reasons quite outside of its own popularity.
So Bitcoin is not a popped bubble; in fact, given the circumstances, it’s fair to say it has held up fairly well to a huge amount of pressure. Furthermore, there are signs that suggest Bitcoin investors have plenty to be excited about in the future.
What does the future hold for Bitcoin?
While Bitcoin’s performance in 2018 thus far has been disappointing, there are signs that things may be improving. The price, for example, is beginning to rise again; at the time of writing, one Bitcoin is worth $7496.12 – a substantial improvement from as little as two weeks ago.
There are various reasons for improvement, but arguably the most notable is the SEC showing willingness to consider CBOE Global Market’s application to buy Bitcoin through exchange traded funds (ETFs). If approved, this would mean that institutions would be able to purchase Bitcoin for the public and for investment purposes – a move that, until now, the SEC has outright resisted due to concerns about theft risks and infrastructure. If ETFs were approved by the SEC and thus made way for future institutional purchases, this could lead to another Bitcoin rally. That rally may, ultimately, result in a sustained bull run.
It should also be noted that while Bitcoin has struggled in 2018, it has not plummeted to nothing the way that many naysayers expected at the end of 2017. Essentially, it has not performed as a conventional bubble. It has maintained much of its growth and, without that sudden spike in December 2017, would be showing consistent growth that is almost unrivalled by any other financial product. This suggests there is real thought and dedication supporting the Bitcoin project; this, ultimately, should lead to many more bull runs in the future.
What’s more, if there’s good news to come from the SEC, it is more than conceivable that Bitcoin’s next bull run will arrive sooner than many anticipated. There is every chance that Bitcoin will enjoy another fruitful fall and winter, with the chance of another bull run developing towards the end of 2018.