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Are we heading to another January 2018 for Bitcoin?

Photo of: Nathan VDH
by Nathan VDH

The changes in the price of Bitcoin are not unlike those of 2017. Should we therefore fear a lasting drop? Not for the CEO of TradingView. For Pierce Crosby, two major factors differentiate the Bitcoin market in 2020.
A sharp rise, then a sharp fall. A new surge in the price, followed by a sudden decline. Bitcoin’s current volatility is not easy to understand and may seem incomprehensible. Like the historical episode of 2017?

Many analysts draw a parallel between the two periods. However, such a prospect is not a happy one. After the $20,000 of December 2017, Bitcoin recorded months of decline to below $4,000.

Is the story about to stutter? No,” answers TradingView Managing Director Pierce Crosby. Over the past three years, the cryptocurrency market has changed dramatically, he argues.

But the most important factor for Crosby is the dispersion of assets. “The key here is to look at the distribution of accounts, i.e. the total number of accounts holding a given crypto asset,” says the expert.

“In 2017, there was a disproportionate weighting in very few accounts, whereas today, the number of accounts has increased dramatically. The Coinbase company alone now reports 30 million accounts,” says the head of TradingView.

According to CNBC, this total even reaches 35 million. By comparison, the platform had 11.7 million accounts in October 2017, a few months before Bitcoin’s all-time record. According to Glassnode, more than 800,000 wallets now hold 1 BTC or more.

However, the distribution of Bitcoin remains very uneven, leading to fears of strong variations due to market actions by some major crypto holders. The “wholecoiners”, 800,000 addresses, account for 95% of the value of Bitcoin.

At the same time, tens of millions of users share just 5% of this value. The wholecoiners addresses thus have a Bitcoin weight equivalent to 300 billion dollars. For the remaining 5%, the figure is around 16 billion.

Is this situation so different from 2017? For Pierce Crosby, there is another factor to take into account. It is the participation of institutional investors. For the expert, this adoption “is generally a significant ‘supporting’ factor for the price”.

One more difference compared to 2017: the technology itself. “There are now thousands of applications built on one of the different blockchains in the ecosystem, which also play a key role in stabilizing the price drop,” he says. And the boom in decentralized finance (DeFi) in 2020 would be an illustration of this.