Think back to 2017. Crypto was everywhere. The celebrities hawking ICOs included DJ Khaled, “Floyd Crypto Mayweather" and longtime blockchain enthusiast Paris Hilton. The most watched comedy on television, "Big Bang Theory," named an episode “The Bitcoin Entanglement.” Long Island Iced Tea made the world’s most natural pivot, rebranding itself as Long Blockchain Corp. (The stock jumped 200%.)
And now? Crickets. Even though the price of bitcoin seems to break a new record every five minutes, erupting from $4K to $40K in less than a year, for some reason this bull run feels different – not as mainstream, not as talked about, not as Paris Hilton-y.
So is it really different? There are many ways to measure a bull cycle. The most obvious is by looking at the price, another is to look at things like the frequency of “bitcoin” in Google searches and a third is to evaluate the technical and fundamental metrics – smart analyses from the Nic Carters and Willy Woos of the world.
But then there’s the qualitative side. I wanted to find out how the bull run looks – how it feels – from the perspective of OG bitcoin hodlers. And if this cycle is different, why? And where are we headed?
Let’s start with the kid.
i. 'An excellent year!'
When Erik Finman was 12 years old, his older brother took him to a “very chill protest” in Washington, D.C. This was in 2011. Finman happened to notice a guy wearing an orange shirt that had a big B in the middle.
“What’s that?” the 12-year-old asked.
“It’s bitcoin, man. It’s going to end Wall Street, bro.”
So the 12-year-old looked into this bitcoin thing. He grew curious, and so did his older brother. His grandmother had just given him $1,000. (She thought she didn’t have much longer to live, so she gave checks to all of her grandchildren.) He tried to give it back. His grandma wouldn’t take it. The check was supposed to go for a scholarship fund but instead the kid used it to buy bitcoin. The price of each coin was around $10, so he bought 100 bitcoin. Thanks, Grandma. (Happily, her health improved. “She’s actually my only living grandparent now,” says Finman.)
“Bitcoin became an obsession,” Finman remembers. While the rest of his friends were into Call of Duty or Pokemon, the 12-year-old hustled to get more BTC, texting with strangers to buy and sell. “I felt like a Wall Street broker.” He would eventually cobble together over 400 bitcoin.
You know those dot-com wunderkinds who drop out of college? That’s nothing. When Finman was 15 he dropped out of high school. Since then he helped start the crypto payments company Metal Pay, built a real-life Dr. Octopus suit (inspired by Spider-Man), and launched a satellite with Taylor Swift. (It’s easy to connect with T Swift, says Finman. “IMDBPro lists everyone’s agent; it’s only $30 per month, and the agents check their email.”)
During the frenzied 2017 bull run, the media couldn’t get enough of the Teenage Bitcoin Millionaire. The Guardian photographed him sprawled over a pile of cash, wearing sunglasses, a hundred-dollar bill sticking out of his mouth. GQ covered his streetware. But guess who also consumes the media? Hackers. They spotted a rich target and came for his digital gold. “I was sick to my stomach,” says Finman. “I got emails that threatened to kill me if I didn’t give them bitcoin.” They also threatened his parents, even mentioning them by name along with their work addresses.
“I was terrified to walk on the sidewalk,” Finman remembers. He had insomnia for days. The worst of it came on Aug. 21, 2017 – the day of the eclipse. Hackers knew that everyone would be staring at the sun and away from their computers, so they chose that precise moment to pounce. Erik watched the eclipse like the rest of the world but he happened to get tired of it a little early,. He returned to his computer to see crazy flickering and movements on his screen. Oh s**t, he said to himself, and somehow he booted them from his system just in time. (Amazingly, he didn’t lose any crypto to hacks, but says his email and Twitter were compromised for months.)
And now, his life in the current bull run? There are no calls from GQ. No fawning from The Guardian. Finman has a theory for why this cycle feels so under the radar: The cultural space that was once occupied by crypto is now gobbled up by politics and the coronavirus pandemic.
“[Donald] Trump gets more clicks than crypto,” says Finman. He thinks of the earlier bull run of 2013 as a “golden era,” not just because of the wealth creation but because “you could talk about things other than politics. Back in the day, cool young people were doing cool things, and building cool s**t. I feel like that has been lost.”
He misses going to parties and talking about new apps and crypto, instead of Trump and pandemics. “Maybe [President-elect Joe] Biden’s not as interesting as a person” and “he’ll get less clicks,” says Finman. “Maybe bitcoin is more interesting than Joe Biden.”
Finman and I spoke weeks before the mob of Trump supporters invaded the Capitol, but that wrenching day of Jan. 6 seemed to encapsulate his point. While most of the nation watched, horrified, as chaos engulfed the nation's capital, which perhaps said something dark about America, the price of bitcoin surged another 10%. This is perhaps the great irony of blockchain in 2020 and 2021: the raucous celebrating of bitcoin, juxtaposed against so much real-world suffering (nearly 2 million deaths from the coronavirus) can seem tone-deaf.
As much of the world grieves for the dead, struggles to pay rent or simply tries to make it through the drudgery of quarantine, many of the bitcoin bulls whistle a different tune. “2020 was an excellent year!” tweets a cheerful crypto investor. Another gushes that “2020 was a hell of a year. I’ve never seen a market like it and I’m fortunate to have closed it on a high note … Not only did I finish at all-time highs, but #Bitcoin has finally given me a clarity that I’ve been seeking for awhile. 2021 should be special.”
ii. 'Not yet interesting enough.'
Erik Voorhees, the CEO of ShapeShift, has also been around since near the beginning. He takes us down memory lane. In 2011, the price hit $31, then the bubble popped and it would crater to $2. These were dark days for bitcoin. “Everyone who was skeptical had every reason to believe that it was over,” remembers Voorhees. “All the people hating on bitcoin had a field day for months and months.” The next bull cycle wouldn’t come for another two years, in 2013, when the price again cracked $31. Voorhees remembers giving a talk at New York University with Charlie Shrem, and during the talk the price pumped $5 as they celebrated. “All of the students thought we were a little weird.”
Voorhees has a contrarian take. “It mostly feels the same,” he says. “When you go through several seasons of this market, it feels the same. You have this crazy bubble and then a period of denial after the bubble and then a dark bear market for a while and then a period of stabilization and then another period of growth. That cycle feels very natural to me.” Voorhees says you can’t predict how high it will get or when it will crash, but the overarching patterns feel consistent and predictable.
But does the actual price history bear this out? Let’s go to the graphs. When you first look at a chart that displays the history of bitcoin’s price, these patterns are hard to spot. It looks like bitcoin is worth peanuts for years, then you see the to-the-moon bull run of 2017 then the crash and now today. Many traders look at it differently. They switch the scale of the chart to logarithmic, which basically plots the percentage change of the price.
For example, a jump in price from $1 to $1.1 is a 10% gain, just as a jump from $10,000 to $11,000 is a 10% gain. Both of those jumps would give an investor the same rate of return, so they’re displayed the same on the graph. And when you switch the chart to logarithmic, suddenly you do see the patterns. In fact, it’s easy to see. You see the bull and the bust cycles that repeat several times over the last decade, and you see that each time bitcoin “crashes” the new level is higher than the prior cycle. Looked through this prism, $40K prices look less like wild, uncharted territory and more like the smooth continuation of a decade-long trend. (If you squint.)
As for why we don’t see the same breathless media coverage and why bitcoin is not in the larger cultural conversation? “That’s a simple answer,” says Voorhees, and then adds a slab of juicy red meat for the bitcoin bulls: “We’re not in the real bubble yet.” His logic is that, yes, bitcoin has surpassed its previous ATH, but while “everyone in crypto is freaking out and excited, because they’re like, ‘Yes, we’re back!’” – and while it prompts daily articles from CoinDesk on each new tick upwards (such as $27K, $28K, $29K) – this is not yet interesting enough to curry much mainstream fascination.
A more useful and accurate time comparison for where we are in the current bull cycle, says Voorhees, is not the frothy top of December 2017, when bitcoin flirted with $20K and when the FOMO lured in bitcoin newbies. (Full disclosure: I was one of these newbs, and I bought bitcoin near the top that I still HODL.) Voorhees says a better comparison for where we are is February of 2017, when bitcoin had once again breached $1,000 – after three years of wallowing in the triple-digits – and established what was then a new ATH.
Follow the logic further. “It’s not yet interesting to the mainstream. The super mainstream interest occurs at the tail-end of the bubble.” As for when that will happen? “When we approach $100 grand, that’s when you’ll see it all over the place. And that means [we’ll be] in the latter stages of the cycle.” Voorhees guesses that the current cycle will take bitcoin “somewhere between $100k and $300k,” and that this will occur “between six and 12 months from now,” and then “the bubble will pop, and it will crash down over the next year, probably back below $100k, and probably never below $20K.”
iii. 'Plebs buy to sell, chads buy to buy more.'
My personal theory: In the last bull run, there was still the widespread hope that we could use bitcoin as a way to buy a proverbial cup of coffee. This made bitcoin easy to understand. This made it easy to talk about. The “How to Use Bitcoin!” story was catnip for mainstream publications, offering easy hooks for pieces like Business Insider’s “I spent a day trying to pay for things with bitcoin and a bar of gold.” But widespread merchant adoption never happened. Those stories faded. The mainstream lost interest and the actual use case of bitcoin is now trickier to convey. “A hedge against inflation, as rampant monetary easing dilutes the dollar!” is a tough bumper sticker.
Something else is different now. Back in 2017, much of the nation still had never heard of bitcoin, which made it easy for the producers of ABC News, say, to green-light a segment like “What is bitcoin, the world's most popular cryptocurrency?” Segments like this were everywhere. The Today Show asked, “What is cryptocurrency, and should you risk your money with it?”. Now those explainer videos have already been done. That ABC producer would likely ask, “Didn’t we already run this story? Old news. Pass.”
The peak of 2017-18’s news coverage came in The New York Times’ “Everyone’s Getting Hilariously Rich and You’re Not.” The top image of that article featured two crypto bros — one wearing a Bitcoin sweater, one wearing an Ethereum Sweater, which, it must be said, is tougher on the eyes than the Ugliest Christmas Sweater. I reached out to the Bitcoin Sweater Guy, whose name is Mathieu Baril (who’s now Operations Lead at DerivaDEX, a crypto exchange), to see what’s changed between now and then.
“The 2017 euphoria was strange,” Baril remembers, as the San Francisco meet-ups became “a bit more crazy” and full of those trying to get rich quick. At one 2017 meet-up, Baril says, “some people were walking next to Pieter Wuille and didn’t even know he was a core dev.” Baril says that while he’s now seeing that same kind of get-rich-quick euphoria with decentralized finance (DeFi), the bitcoin run itself feels less hype-y, more solid.
To those following the space closely, the drivers of the bull run are now well understood: an influx of institutional capital (such as MicroStrategy’s trove of over 70,000 BTC), growing optimism from traditional finance (like JPMorgan floating a price of $146K), and a grudging appreciation for bitcoin as “digital gold” that can hedge against inflation.
“This bull run was catalyzed by COVID,” says Jill Carlson, principal of Slow Ventures and a CoinDesk columnist. “Over 20% of all U.S. dollars were created in 2020. This staggering statistic rightly has asset managers fearing inflation and turning to bitcoin.”
That institutional capital didn’t just appear by magic. It took years of behind-the-scenes work. The secret engine of this bull run could have something to do with an obscure bit of paperwork called an “SOC 2 audit,” says Moe Adham, co-founder of Bitaccess, a Canadian startup. SOC stands for “System and Organization Controls,” and while it might lack the sex appeal of "The Big Bang Theory" or a 2017-era Jamie Foxx-backed ICO, it could have a more enduring impact.
In the last bull run of 2017, says Adham, it was extremely difficult, if not impossible, “for listed companies and institutions to actually invest in bitcoin and carry that balance over a year’s-end, and satisfy a financial audit.” It’s one thing for you or me to scoop up some bitcoin on an exchange, but Adham says that a “listed company” (such as Square) needs a more buttoned-up custodian that can withstand the rigors of an SOC 2 audit.
For the last few years, the rise of institutional custodians such as BitGo, Gemini and Coinbase have quietly built out the pipes and plumbing to make these kinds of SOC audits doable. “From a regulatory and compliance perspective, Bitgo … has been hammering away at this problem for a very long time,” says Mike Belshe, CEO of BitGo. “We’re a regulated institution. Anybody outside of our walls that’s regulated needs to work with regulated parties, so now they’ve got partners that they can work with.”
Jill Carlson agrees with those who say that this bull run feels different. “That institutional money will be stickier and have a stronger hand,” she says, adding that it will “open the door for even more institutional money to pour in.” Unlike in 2017, Carlson notes, the bulk of the incoming funds are for the (relatively) more proven assets of Bitcoin and Ethereum, as compared to the rampant gambling on the more exotic blockchain projects that lured speculators with visions of 100X returns, many of which have gone bust.
The idea of institutional “strong hands” makes sense. Dovey Wan, founding partner of Primitive Ventures, says wealthy individuals who allocate only a small slice of their pie to bitcoin are able to outlast the inevitable dips in price, whereas the “weaker hands” don’t have that luxury. “If you have a small net worth, you can’t HODL a large percentage of bitcoin due to price volatility,” explains Wan. Or as she once posted on Weibo, “Plebs buy to sell, chads buy to buy more.”
While Wan (who’s based in Hong Kong) agrees this is a fundamentally different bull market than in 2013 and 2017, she notes that it’s not perceived the same way around the globe. China still has a more bearish view. “Most Chinese traders and crypto people have not been following the ‘institutional influx’ from the West closely, and domestically crypto sentiment has always been more bearish due to local regulatory stiffening,” explains Wan, such as the regulators cracking down on exchanges and mining, or the imprisonment of Chinese exchange founders like Star Xu.
Wan says the difference in crypto sentiment between the East and West is so stark, a savvy trader can make easy money by shorting bitcoin during China’s daytime and going long bitcoin during the U.S. daytime. “It's a simple straight alpha strategy since 2018.”
iv. 'Filling itself out.'
Marshall Hayner started mining bitcoin on the original 2008 MacBook Pro, which fried his laptop. When he brought it into the Apple repair shop, the guys laughed at him for mining “bitcoin,” which they had never heard of. Trading was tough. There was no CoinBase or Binance or even a Mt. Gox. Back then they bartered with bitcoin for things like T-shirts, socks and Visa gift cards – ironic, given bitcoin’s anti-bank ethos. “I just wanted to prove to myself, does this really work?” says Hayner. They traded in forums and chat rooms. The goal was not to make money, but to experiment and play.
In 2010, Hayner had scooped up enough bitcoin that he remembers thinking, If this thing ever goes to $20, I’ll be a millionaire. When it did finally hit $20 he happened to arrive in Belize for a vacation with his girlfriend. Practically as soon as the plane landed he told his girlfriend that he needed to leave because he had to go back home and access the hardware wallet on his computer to sell crypto. She wasn’t thrilled. So he raced back home to Boston, desperate to cash out and get rich … but while he was on his flight the price plunged 90%, back to $2. The good news is he would eventually become a millionaire, the bad news is the girlfriend didn’t last.
Then came the 2013-14 bull run, when bitcoin shot from $13 to $1,000 in just under a year. “2013 was the moment when it actually proved to have real commodity value,” says Hayner, who’s now the CEO of Metal Pay (he launched it with Erik Finman, the Teenage Bitcoin Millionaire.) Banks in Greece and Cyprus failed. ATMs ran out of money. Europeans were hungry for an alternative to fiat. This wasn’t just speculation or FOMO – people bought bitcoin to use it. “Incremental demand for bitcoin is coming from the geographic areas most affected by the Cypriot financial crisis – individuals in countries like Greece or Spain, worried that they will be next to feel the threat of deposit taxes,” one fintech analyst wrote at the time.
If 2013 was driven by Greek and Cyprus demand and 2017 driven by retail speculation (or hype and FOMO), what does that mean for today? “2020 is the year where most people have heard about bitcoin, and most people have heard about cryptocurrency,” Hayner reasons, so they’re investing with eyes wide open. “This time around, almost everyone knows what this is.”
If everyone knows what bitcoin is, that might explain why the Google search results aren’t anywhere near the booming heyday of December 2017. But that could be changing. Just a month ago, when I began researching this article, searches for “bitcoin” were only about 20% of that December peak. Now it’s climbing. Just in the past week, as the price of bitcoin shattered records by the hour, the searches more than doubled. This gives some ammo to Voorhees’ theory: The public will catch up if the price keeps rocketing.
Anecdotally, it does seem like the pace of bitcoin chit-chat has started to pick up. I’m now getting texts from buddies asking how to buy crypto, which hasn’t happened since early 2018. And now we see sentiments like this: “Helped my 81-year-old grandmother put her $600 stimulus check in bitcoin yesterday,” one user tweeted on Jan. 6. “She gave me instructions to distribute it between her children in the case of her death. Her mother lived to 101. ... Personally helping mint a new hodler every week as of late.”
I spoke with one last old-school bitcoiner to get some perspective. “I’ve lost count, but I’ve been through seven or eight of these bull cycles,” says Charlie Shrem, the founder of the early (and now legendarily defunct) exchange BitInstant, and who – perhaps more than anyone – has seen both the peaks (easy millions) and valleys (jail time) of crypto, and who is now hosting the podcast Untold Stories, chronicling the history of bitcoin. “$1 to $10, $10 to $100, $100 to $1,000, and now $10,000 to maybe $100,000, or plus,” says Shrem, almost nostalgically. “This one was inevitable.”
Shrem suspects the bitcoin price is “filling itself out,” in the same way that an air mattress needs to be filled before it can support your weight. In other words, if bitcoin is to actually be the relevant currency that its advocates envision, then the price almost must rise and keep on rising, just as an air mattress needs to be filled. Otherwise it won’t do what it’s supposed to do. (He acknowledges it’s also possible that it goes to zero.)
“I think bitcoin wants to be a six-figure number,” says Shrem. “And I think people who own bitcoin now want to see the value of one bitcoin be a six-figure number.” It’d be tough to find a bitcoin owner who would disagree, but then again every owner of shares in Pets.com (a poster-child disaster from the dot-com era) wanted to see it go to the moon.
Shrem, like nearly everyone who spoke to me, says that this one really does feel different. For the prior bull cycles, even for the crypto-optimists, he says there was always an undercurrent of anxiety as the price ascended, like watching “a rocket ship that takes off, and every time there’s a 30% chance that something will go wrong.” Now he doesn’t feel that anxiety. He sees less of the FOMO, less of the hype, less of the greed. “I don’t see anyone talking about Lambos on Twitter,” says Shrem.
UPDATE: Mathieu Baril was Bitcoin Sweater Guy, not Ethereum Sweater Guy. We regret the error.
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