The Bullet No.8 Back to the Future
TL;DR “History doesn’t repeat itself, but it often rhymes” – Mark Twain.
4 years ago, to the day, I was sat on a balcony in Mallorca plugged into my laptop, as part of an early personal and successful “work from home” experiment. As I write this, I find myself on the exact same balcony, with the same view, triggering memories of that time. There are a few similarities happening today with what I experienced then, so I’m going to go back in time, in the hope I may learn something:
1. Bitcoin price hit new highs
In late October 2017, Bitcoin hit a new all-time high price relative to US dollars of $6,000, while I was sat on this balcony trying to plan Unilever media campaigns for the following year. I remember being utterly amazed as it ramped up 20% in 3 days and it’s repeated the trick in 2021, by hitting new all-time highs again, now at $66,000, and an increase of over 40% in the last month. What’s potentially even more interesting is that back in 2017, Bitcoin then went on to be worth nearly $20,000 by the end of December. If that was to repeat in 2021, we’d be looking at over $200,000 for one Bitcoin in the short space of 8 weeks. I’m not saying it will happen, but it has done it before, and I wouldn’t be surprised if it does so again.
2. It was a rollercoaster not a rocket ship
While all time high prices are great, it never happens in a straight line. Those 8 weeks in 2017, saw daily swings in the price upwards and downwards of up to 20% in a day. Sometimes I’d start my journey home from work with the price 10% up for the day, only for it to reverse and be 10% down by the time I’d got home. Bitcoin is volatile compared to other assets like shares, but that’s because its still relatively new and over time that volatility should decrease.
3. Where Bitcoin went, others followed
I’ve mentioned before about the 1000s of other crypto currencies that are a variation on Bitcoin but try to do things slightly differently. One such project that became very popular in 2017, was Ethereum, and today it’s still the 2nd most valuable crypto in total. Ethereum is a blockchain that attempts to carry more transaction volume than Bitcoin and where you can programme the currency to execute different actions, called smart contracts. Within 3 weeks of Bitcoin reaching a new high price and started it’s pullback, Ethereum doubled in price, before it too started to come back.
4. Hype and media attention
When values go up, the media starts to pay attention and stories are told of people who’ve made and lost fortunes. One such story, back in 2017, was of a Dutch man called Didi Taihuttu who sold all his family possessions to buy Bitcoin and travel the world with his children to live a Bitcoin only life. You can see what Didi and his family are up to via Twitter and his YouTube channel and while what they’re doing is unconventional and not for everyone, it brings greater awareness overall, and the media love it.
5. Awareness = conversation
Greater awareness means that Bitcoin and crypto generally get more talked about by people who’ve either not heard about it before, or who’ve heard about it but want to know more. I remember having a few late 2017 conversations with family and friends, while it was in the headlines. Those similar conversations are starting to bubble up again now, directly from emails and texts, which I love getting. You can also see it in trending topics on Twitter as well as a spike in the volume of Google searches for crypto related terms.
6. China will ban Bitcoin again
I’ve lost count of how many times China has banned Bitcoin. They did it back in September 2017 and somehow they managed to tell everyone that they were banning it again in September 2021, despite already being banned. I’m not sure how many times you can ban something, until it’s fully banned, but these headlines always get a reaction and lead people to be concerned. China also banned Google and Facebook, but that didn’t stop their products dominating the rest of the world. China wants control, that’s simply the political system they have and what they do. Something like Bitcoin, which isn’t controlled by anyone, was never something they would like.
7. Let there be nonsense
At the peak of the 2017 hype was a craze for ICOs, (Initial Coin Offerings) and Crypto Kitties, digital cat pets that exist on blockchains. Fast forward to 2021 and we have NFTs (Non Fungible Tokens) that are being sold for millions and dog related cryptos called Doge and Shiba. During any mania phase of a cycle, there will be something that just looks a bit daft and it feels like that’s happening again. Some will stick and have value longer term, like some NFTs, but there will be others that disappear completely.
When 2017 was over, 2018 brought with it a big correction and all the hype went away for a few years. That’s when I got my head down, learnt as much as I could, so I’d be as ready as possible for any repeat. There are some who think we’ll have a similar correction this time around and others that think we’re at an inflection point where the correction will be less dramatic than before. We’ll have to wait and see how that plays out but I’m trying to prepare for either scenario. If 2017 is any guide, the next 2 months are setting up for a wild ride.
Peace, love and Bitcoin.
Rob