A common belief that has been doing the rounds lately is that Bitcoinâs recent price behavior is a replica of its historic 2017 bull run. Thatâs all well and good, but what most people forget is that back in 2017, there were stories equating the 2017 bull run to 2013âs.
#bitcoin is creeping up people!!!
I smell some bullrun of #2017 nostalgia đđ $XRP $ETH $ADA pic.twitter.com/w6H3oxXeNBâ Rob_Cash71 (@Rob_Cash71) October 27, 2020
Thatâs not all, however, as many in the community seem to have also forgotten how Chinaâs PBoC has reacted to each of these yearly developments. Whenever Bitcoin crossed a resistance level that hadnât been tested for a long time over the aforementioned time periods, the PBoC reacted, following which, the price of the cryptocurrency fell.Â
Simply put, there have been three bull runs â 2013, 2017, and the ongoing one â and the PBoC has reacted to each and every one.Â
Back in 2013, when Bitcoinâs price crossed $1,000, the Peopleâs Bank of China issued some comments and Bitcoin crashed. The Peopleâs Bank of China (PBOC) had then sent out a statement claiming Bitcoin was ânot a currency in the real meaning of the word.â In fact, the PBoC went on to restrain financial institutions from getting further involved with the cryptocurrency.
The rest, as cliched as it may sound, is history. Bitcoinâs daily percent change before and after the PBoCâs statements is evident from the following chart from Ark Invest.
![PBoC's reaction to every Bitcoin bull market ever](https://engamb.sfo2.digitaloceanspaces.com/wp-content/uploads/2020/11/01132509/Bitcoin_Daily_Percent_Price_Change.jpg)
Bitcoin Daily Percent Price Change || Source: ARK Invest
As can be observed, the daily percent price change dropped to negative 10% on the day of the PBoCâs announcement. While the price recovered soon after, the cryptocurrencyâs price rally did suffer as a result of such an announcement. Â
Fast-forward to 2017, when Bitcoinâs price crossed $1,000 again, the PBoC sent out new statements indicating that its representatives had met with major China-based Bitcoin exchanges to reinforce the importance of remaining compliant with ârelevant laws and regulations.â After the PBoC announcement, Bitcoinâs volatility dropped.
![PBoC's reaction to every Bitcoin bull market ever](https://engamb.sfo2.digitaloceanspaces.com/wp-content/uploads/2020/11/01132621/Bitcoin_Volitility_PBOC_Announcements.jpg)
Bitcoin Volatility || Source: ARK Invest
Throughout the PBoCâs announcements, volatility remained around 3.4% in 2016/17, while the same was as high as 9.1% in 2013. However, a week after, the volatility was noted to have risen by nearly two times in both 2013 and 2017.Â
As anticipated, in 2020, when Bitcoin crossed $12,500 and consecutively, the next resistance levels at $13,500 and $13,700 were breached, the PBoC made an announcement. The bank revealed a draft law that bans private entities from issuing digital currencies.
Itâs interesting to see the influence the PBoC yields, and how it dictates the narrative, seven years since the first Bitcoin bull run. The announcement came on 28 October 2020, and this time, the impact was the opposite of the conventional pattern.
![PBoC's reaction to every Bitcoin bull market ever](https://engamb.sfo2.digitaloceanspaces.com/wp-content/uploads/2020/11/01132732/Screenshot-2020-10-31-at-21.25.13.png)
Historical Price Data for Bitcoin || Source: Coinmarketcap
Post the announcement, the price hit a high of $13,837 and it has sustained itself above $13,400 for 3 consecutive days since. Though the price is not entirely dependent on the PBoCâs announcement, back in 2013 and 2017, the impact on the price rally was negative and significant.
Currently, the response has reversed the existing trend. A major factor behind the same could be the fact that current fundamentals are stronger than ever and with over 18.5M Bitcoins in circulation, the network is growing stronger every day. Institutions like J P Morgan, Grayscale, MicroStrategy, Square, and PayPal have associated themselves with Bitcoin, further suggesting that a regulatory nod may be on the cards.Â
Since the asset is more mature than in the past, the price will likely be influenced by relevant factors like network health, transactions, adopters, supply, and demand, rather than statements issued by the PBoC or the FUD that is a response to it.
Author: Ekta Mourya ::: Source link