The bitcoin price, still some way off its all-time high of around $20,000 per bitcoin, has climbed through 2020, coming within touching distance of $16,000 this week after falling under $4,000 in March.
Despite bitcoin’s mammoth rally, mainstream interest in bitcoin and cryptocurrencies has failed to return to the same degree as at the height of bitcoin mania in late 2017—and may mean the latest bitcoin price surge still has a long way to run.
Interest in bitcoin, as measured by Google search data, is currently flat on the last two years, with Google Trends, a barometer used to gauge general interest in trending topics, showing bitcoin search volume is under where it was in June 2019—when the bitcoin price was floundering at around $10,000.
Many in the bitcoin and cryptocurrency community feel this subdued popular interest in bitcoin amid a bitcoin price surge is good for bitcoin in the long-term.
“It may sound counter-intuitive but the lack of mainstream interest is actually great news for bitcoin’s price prospects,” financial author and trading veteran Glen Goodman said via email, adding there is increased risk of prices collapsing “when a barrage of over-excited traders pile in.”
“These latecomers are ‘weak hands’ who tend to panic and sell at the first sign of danger. It is the same phenomenon we see in all asset markets, not just crypto. A slow, steady build in bitcoin and crypto interest will make for a more sustainable rise in prices.”
“I think retail mania, which does get reflected in Google Trends data, will eventually come,” economist and crypto analyst Alex Krüger said via Telegram.
“What you are observing in trading is what we call a divergence. One would usually expect the price to converge with the underlying data but that is too simplistic and ignores that their are other factors driving this bitcoin move.”
Krüger sees institutional and private wealth management interest, as well as corporate interest, as driving the latest bitcoin price rally—unlike the retail mania that pushed bitcoin to the giddy highs of $20,000 in late 2017.
In October, payments giant PayPal PYPL jumped into the bitcoin and cryptocurrency space, announcing it will soon be offering bitcoin buying and spending services. The news sent shockwaves around the financial world, with PayPal’s perceived capitulation to bitcoin taken as a sign broader adoption is on the way.
“Fundamentally, bitcoin is a much stronger asset now than it was [three years ago] due to a number of factors, including the halving, a rise in institutional adoption, real-world use cases emerging, publicly listed U.S. companies moving 10% of their balance sheet into the asset and payments giants like PayPal accepting crypto,” Nicholas Pelecanos, head of trading at blockchain development platform NEM, said via email.
“Historically, bitcoin witnesses end of and early year rallies, so I wouldn’t be surprised if it reaches or sets new highs this year, or in the early part of 2021.”
A return to the $20,000 per bitcoin level is something many in the cryptocurrency space have hoped for over the last few years.
Bitcoin’s 2017 FOMO surge and subsequent crash caused much of the financial world to write bitcoin off as a flash-in-the-pan, a Ponzi scheme or a bubble more like the 17th century tulip mania than the premature dot-com boom of the late 1990s.
“Breaking the all-time high at $20,000 would catapult bitcoin back into the headlines, so that’s when we’re likely to see mainstream interest in bitcoin start to take off again,” said Goodman.