Is it 2013 or 2017?
For bitcoin's investors, traders and enthusiasts, an answer
to this question might be harder to give today than you might imagine.
Bitcoin prices surged above the $1,100 mark this week (near
all-time highs) only to sink back down to earth amid higher volatility and
foreboding – if not unclear – news out of China. Taken together, the
developments evoke memories of 2013, when the price of bitcoin surged to
similar levels, bringing the digital currency to international attention.
Both rallies were buoyed by bullish sentiment among those
actually trading in the market, and somewhat more eerily, both would face
headwinds from events in China.
At the same time, the ecosystem is fundamentally different
today than it was in 2013-2014, both in terms of the exchange ecosystem (where
the majority of trades are happening) and the amount of public interest in the
digital currency itself (and its underlying blockchain technology).
So, how do the two bull-runs stack up side-by-side?
We explore some similarities and differences below using
data from the CoinDesk Bitcoin Price Index and data provider Bitcoinity, as
well as comments from industry participants.
1. 2013's rally was short-lived
First, let’s start with the price.
The graph on the right shows the price as it progressed from 6th
September to 6th January in 2013, a four-month period during which the price
shot past the $1,100 mark to its highest price ever.
Now, let’s take a look at the past three months.
Seems a bit different, right? Or maybe not? Now that we’ve
laid the scenes for the respective rallies, let’s compare the two.
The most glaring difference developing between the two
rallies lies in how quickly they came together. Prices climbed quickly during
the 2013 rally, soaring more than $600 in a two-week period.
By contrast, the recent rally developed more slowly over
time. This state of affairs changed over time, particularly as December drew to
a close, and prices inched closer to $1,000.
The data suggests that the 2013 rally was far more volatile
in its buildup, whereas in the aftermath of the peak, there are more
similarities in terms of volatility.
In total, the price of bitcoin was above $1,000 for just 10
days in 2013, and only one day in 2014, according to BPI data. In 2013, prices
quickly returned to the $600-$700 level, a low that, at press time, hadn't yet
been reached in 2017.
On the other hand, both have similarities.
Both rallies were buoyed by bullish sentiment among
stake-holders, with those trading or watching the markets expressing a strong
belief that markets would keep on rising – "to the moon", so to
speak.
2. Volume is now higher
Price data, however instructive, is only part of the
picture, though.
To look at another side – and gain a window into some of the
ecosystem differences between now and then – one should take a closer peek at
volume data between the respective rallies.
For that, we'll turn to data provider Bitcoinity, which
publishes information on global bitcoin trading markets.
Let’s cast a wide net and look at the volume picture over a
five-year period, predating the 2013 run.
