Bitcoin at $18k in 2020 Is Not the Same as Bitcoin at $18k in 2017

Not even close. Here’s why.

Jason Deane
Nov 23, 2020 · 9 min read
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Image: Licensed Adobe stock, by grejak

Ah, how I sigh when I think back to the heady and wild days of the cryptocurrency boom in late 2017 and early 2018.

It’s funny, but somehow I now think of that crazy brief period of madness in the same way as I think about all the stupid stuff I did as a teenager on various “lads” holidays decades ago in (thankfully) pre-social media times.

In both cases, even though one is considerably more recent than the other, I can’t help defer to the universal “get out of jail free” card of:

We were young. We didn’t know what we were doing.

If you were there, you probably know what I mean. It’s an analogy that’s full of holes, and yet somehow it still works.

A purely speculative buying frenzy had started the move on the bitcoin price, which, in turn, attracted buyers for no other reason than “number go up.” Who cared what it did or how it worked? No one, apparently.

But some of us did care. Some of us really believed that Bitcoin was the way forward, that a new universal store of value could level the playing field for everyone and that a new era of trade and productivity could be facilitated by a new technology of money.

And, in fact, some of us had even been there before.

Back in the 1990s, I had been directly involved with the adoption of the internet and could see the same possibilities here as I’d seen then, as well as many of the same objections, long since disproved.

Possibly clouded by this experience, I remember thinking as bitcoin ploughed through its resistance levels up to almost $20,000:

Could this be the moment this goes mainstream? Are we actually ready?

The point is, it didn’t matter if you were there simply because everyone else was there, or, like me, you were there because you believed in this nascent technology and its ability to change the world. We were all caught up in it.

We all thought we were on board the unstoppable train that would make the world a better place and make us wealthy at the same time — a perfect combination that only happens once in a generation.

However, in a way you can only really appreciate with hindsight, this was far from the truth and had no basis in reality at all.

In fact, behind the curtain, it was all a right old mess.

On Dec. 16, 2017, Bitcoin powered through the $18k barrier and, in fact, it would only be a matter of hours before it reached it’s all-time high of $19,666 on Dec. 17.

But under the glitz, the incessant whooping of early investors and equally incessant posting of Lamborghini pictures in every trading chat room, it was clear it was all an illusion, if only we had taken the time to look hard and objectively at the data.

This wasn’t based on fundamentals — after all, there were barely any at this stage — this was all based on emotion from retail buyers, and one emotion in particular: FOMO (Fear of Missing Out.)

These buyers were almost all retail and almost all amateurs trying to find the next big thing now that bitcoin itself had topped out, usually by investing in some dodgy ICO (Initial Coin Offering) for which you first needed bitcoin.

If you were going to give someone an example of a textbook bubble, this would be it.

And, even though this was only three short years ago, the ecosystem was very different in those days. There were fewer on-ramps, less regulation and an attitude of disdain from institutions such as banks, funds and corporations.

Even if, by some bizarre notion, an established mainstream institution did want to invest in bitcoin, it was next to impossible to do so, as there was a complete lack of certified custodial solutions.

Conversely, there was also a lot more general awareness as mainstream media were covering bitcoin’s meteoritic rise almost minute by minute.

The natural conclusion of this combination of events and the passage of time confirmed what we were already suspected; the overwhelming number of people investing in bitcoin at that point were a) doing so for purely speculative reasons and b) retail customers investing primarily for themselves.

In fact, this can be seen very clearly from the blockchain data of the time through any number of charts. Consider this one:

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Image: Median Bitcoin transaction fees, Dec 2017-Oct 2018 (public blockchain data from Bitinfocharts)

Over the bubble period of December 2017 to January 2018, Bitcoin fees rose massively, indicating just how choked the system became.

Around Dec. 23, median fees reached a peak of $34, but some people paid significantly more than that to move their bitcoin from one place to another or, more commonly, move their newly acquired bitcoin to some minor exchange to convert to the latest ICO darling. Confirmation times were measured in days rather than minutes.

The mempool data (effectively the “queuing” area for unprocessed bitcoin transactions) shows how this came about.

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Image: Mempool size for Bitcoin, source:

Never was there such a queue to process transactions — before or since — and it was no surprise with a wildly pumping price that people wanted their transactions confirmed quickly. As a result, they were willing to pay over the odds to do so.

At the same time, media coverage was exploding on all financial news outlets and social media was booming.

Tweets about Bitcoin reached an all-time high on Dec. 7, 2017 at 155,000 in one day according to data from As a frame of reference, during “normal” times, Bitcoin runs at about 16,000 a day.

This was all to do with lots of FOMO-driven individual (retail) transactions occurring all over the world. Exchanges, which mostly use off-chain transactions that don’t create high volumes of network traffic, were not as widely established, and many people still bought through systems such as

But in reality, it was the sheer volume of end-user activity that overwhelmed the network. As the price got higher, the greed index began to rise and, as is usual with overheated markets, people started borrowing heavily to invest even though, in many cases, most had no idea what they were doing.

Through all of this, institutional investors stayed away. They had the experience to know that a bubble like this was something you don’t get involved with but also a complete indifference to the asset anyway.

Bitcoin, after all, was a cute little idea that was a fringe experiment in money, but no more than that.

Eventually, of course, the price became too high for new money to enter and the inevitable decline began. Inexperienced traders were wiped out, and many became bitter about the whole thing, vowing never to return to the cryptocurrency space.

Bottom line? There was absolutely no fundamental basis for the price to get to where it did. It was entirely by speculation from people who, frankly, had no business being there and, in most cases, had no idea what they were doing.

It’s a harsh statement.

But it’s also true.

Fast forward three years, and we find ourselves with the same dollar value but a totally different set of circumstances. Those who were there for both experiences can feel the difference at every level.

If 2017 was an epic Ibiza-style beach party full of inexperienced kids overdoing it to excess without a thought for any consequences, 2020 is a reserved corporate black-tie affair, with a six-course meal and jazz band.

And this time the analogy fits perfectly on many levels.

Bitcoin has grown up. It no longer goes around bragging about how it can make you rich in the same way a used car salesman might convince you that that 1998 Chevy has only had one lady owner.

Instead it refers to “insurance,” “store of value” and “inflation hedge” — you know, the sort of thing your dad might talk about.

And this time, those who are seeking to secure their own slice of the Bitcoin pie are exactly those who would attend such a prestigious event in the first place; fund managers, CEOs, influential high-net-worth individuals and even the odd politician and celebrity.

Unlike the “kids” who came before them, these people know exactly what they are doing. They understand the consequences both of investing in bitcoin and, perhaps more importantly, not investing in bitcoin.

They can see where unlimited quantitative easing and unprecedented government intervention will lead. They know a new paradigm is coming.

The other big difference is the attitude to resale. This Bitcoin is not being bought for speculative purposes and is unlikely to find its way back on the market at any price.

Some, including Michael Saylor of MicroStrategy, the first publicly listed company to convert a substantial part of it’s cash reserves to bitcoin, have made it clear it will be a permanent reserve and a way to keep and transfer value “not over a 1000 miles, but over a 1000 years.”

Of course, that bitcoin may well be used as leverage or collateral in the future, but the asset itself seems increasingly likely to stay where it is once purchased, thereby reducing supply permanently.

So, in a calm and measured way, they have been collecting as much of the asset as they can, and, like before, this is visible on the blockchain data, or, depending on your point of view, it isn't. Here’s what I mean:

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Image: Median Bitcoin transaction fees, Oct 2019-Nov 2020 (public blockchain data from Bitinfocharts)

Incredibly, this is the same chart on the same scale as we saw previously, only this time with the date shifted to the last twelve months. The difference is quite remarkable.

While Bitcoin fees have indeed increased slightly, that increase is marginal and transaction times remain nominal. This, clearly, is a different type of investment.

There’s also another fascinating aspect to this; there is almost no mainstream media coverage of this the price movement this time around, and Google searches for Bitcoin-related subjects have not increased by any significant margin.

Tweets have increased slightly and now average around 45,000 a day, but this is still down by 70% by comparison. It seems there are almost no retail investors. At least, so far.

It remains possible that there will, again, be a rush of inexperienced retail investors looking to jump on the bandwagon, but it is already clear this is late in coming.

Anecdotally, I have already had calls from people I’ve known a long time asking if now is a good time to buy. It’s a difficult question to answer without getting irritated and referring— sometimes subtly and sometimes not so subtly — to the fact I have presenting the case for many years now. But there’s no point getting upset about it. It just is what it is.

But in the meantime, make no mistake about what is happening here.

This is the simple culmination of a number of different factors; from the dismal macroeconomic backdrop accelerated by coronavirus to the formal recognition of key and influential figures, businesses and organizations that Bitcoin just, well, works.

And that being the case, what we’re seeing here is likely just the beginning.

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If you found this useful, you’ll almost certainly enjoy these:

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If you’d own any Bitcoin yet, you may want to consider this article. A tiny investment could make all the difference — but time is of the essence:

Written at the beginning of 2020, the Coronavirus has accelerated the predictions talked about here. How many will we see complete by the end of the year?

Disclosure: The author of this opinion piece has been heavily involved with bitcoin for several years and holds a substantial cryptocurrency portfolio, including bitcoin. He also has a mining operation running the SHA-256 algorithm based in Siberia and is a published author on the subject of promoting the understanding of cryptocurrency. Jason is an analyst at Quantum Economics. This story first appeared on

Disclaimer: This content is for educational purposes only. It does not constitute trading advice. Past performance does not indicate future results. Do not invest more than you can afford to lose. If you found this content interesting, and have an interest in commissioning content of your own, check out Quantum Economics’ Analysis on Demand Service.

Quantum Economics

Analysis. Advisory. Money Management

Jason Deane

Written by

I blog on things I am passionate about: Bitcoin, writing, money, life’s crazy turns and being a dad. Lover of learning, family and cheese. (

Quantum Economics

Quantum Economics is a publication for all those who wish to gain a greater understanding of why markets move, what influences them, and how you can get ahead of it.

Jason Deane

Written by

I blog on things I am passionate about: Bitcoin, writing, money, life’s crazy turns and being a dad. Lover of learning, family and cheese. (

Quantum Economics

Quantum Economics is a publication for all those who wish to gain a greater understanding of why markets move, what influences them, and how you can get ahead of it.

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