[Insight] Revival of BTC in 2017: What Could Be the Reason?
Bitcoin is keeping up its uptrend, reflecting the fresh breeze blowing for the digital asset market. Right now, it’s currently in short-term adjustment, but news like entering of the formal institutions and investment bank’s positive stance towards Bitcoin are arriving continuously, thus the investors are even showing their expectations that “Could this be the return of 2017?” Though there is a saying in Korea that, “Never ride upon a galloping horse,” which means we should be careful for the market that keeping up its uptrend, but this rate of rising in Bitcoin is indeed quite a while since the year 2017. Then what is the leading factor of this status quo?
Long-term BTC Holders Are Determined to Hold at Their Private Wallets
The first indicator is the occurring issue in the moving volume of BTC in exchanges. Currently, most of the Bitcoin trades are happening within the exchanges. Whether the traders are normal investors or speculators, they use to store their digital assets in a convenient depository for trading purposes in order to react quickly to the fast turning of prices and market movements. Almost 13% of the Bitcoins currently in circulation are deposited at exchanges or wallets under the control of the exchanges.
Ki-young, Ju, CEO of CryptoQuant, also said that the reason they could forecast the crash of Bitcoin in the last mid-March’s ‘Black Thursday’ was all due to the ‘increased moving volume within the exchange that was held by the whales.’ They saw the movement of the digital assets from the whale investor’s personal wallet to the exchanges as an indicator showing the possibility of selling off is increasing.
And the recent movements are showing that long-term holders are moving BTC to the personal wallets or the 3rd party exchanges. Experts say that such trends in transactions are the factors backing the rise of Bitcoin.
Coming of the Institutional Investors
The Second evidence of the rise is the entering of institutional investors. The most talk of the field was a software company called MicroStrategy. Michael Saylor, CEO of MicroStrategy, said that his company purchased almost USD 425 million worth of Bitcoin this summer, thus causing a sensation to the digital asset field. And later, Square also announced that they invested USD 50 million, which is equivalent to 1% of the total asset of the company. Also, the increased BTC holding by Grayscale, a digital asset management company under Digital Currency Group (DCG), is showing favorable factors.
Increased Search Volume in Google = Increased Interest of the Investors
The third indicator is a search trend in Google. At the end of 2017, when Bitcoin reached its peak of around USD 20,000, the search volume of ‘Bitcoin’ on Google showed a rapid surge. And recently, the rise of Bitcoin is showing the same trend in search volume on Google. What’s stunning is that even there was a surge in Bitcoin’s search volume, it is still around 10% of the search volume in 2017. The industry believes the reason for this trend is because the current rise of Bitcoin is basically headed by institutional investors, unlike in 2017. In other words, if individual investors are showing more interest, the rise of expectation in Bitcoin will increase even further.
Effective Supply Volume of BTC
The last factor that is noteworthy is the effective supply volume of Bitcoin. There are currently around 18.55 million Bitcoins have been mined. And in this context, the effective supply volume means the volume in possession without selling after its mining. On the other hand, the active supply volume indicates the number of Bitcoins that has been traded at least 1-time. And along with the price rise of the Bitcoin, the active supply volume is showing a decreasing movement. This fact indicates that the Bitcoin holders are preferring to hold the BTC rather than selling them.
The yearly active supply volume of Bitcoin has shown a decreasing trend since early 2018. Currently the active supply volume of year 1 is 38%, and the year 2 is 56%. That means that more than 60% of the available supply volume has shown no movement within the last 1-year, and more than 40% of the supply volume has not moved in the recent 2-years. By determining the movements in such factors, perhaps we could forecast and weigh the future price of the Bitcoin. But for now, the current main interest of the market will be whether Bitcoin will score a new highest record within this year.
*This research and analysis document has been prepared for the purpose of providing information that can be used as a reference based on our reliable data and information, but we cannot guarantee its accuracy or completeness.
*The document has reflected the individual’s opinion and it may not be consistent with the company’s official point of view.
