The Bitcoin (BTC) price surged to all-time highs on Wednesday, zipping past $20,000 in a bear witness of bullish momentum for the flagship cryptocurrency.

Although it'due south easy to draw parallels between this twelvemonth'due south bull market and the speculative frenzy that drove the 2017 rally, the foundations underpinning Bitcoin are much stronger today than they were just a few years ago.

Bitcoin-as-a-hedge

While at that place are many metrics that could explicate Bitcoin'southward resurgence this year, information technology's important to start from the very top. Dissimilar in 2017, investors today are accumulating Bitcoin with a articulate purpose. The digital currency'southward effectiveness as a hedge against inflation is leading to wider mainstream adoption, especially amongst savvy investors who understand monetary policy.

Since inception, Bitcoin has been a superior store of value than any other asset. The May 2020 deflationary halving outcome highlighted Bitcoin'south scarcity to a wider audience than always earlier.

As crypto analytics business firm Chainanalysis reported last calendar month:

"[...] first-time Bitcoin buyers and buyers looking to unload fiat currency for Bitcoin equally a hedge against worrisome macroeconomic trends are responsible for much of the electric current demand."

Institutional demand

2020 could go downward equally the year that major institutions flipped the script on Bitcoin — maybe permanently. Unlike in 2017, when Bitcoin's surge was mainly driven by retail speculation, the 2020 bull market appears to be guided by the cold, calculating easily of smart money.

Cointelegraph has been reporting for months about Bitcoin's gradual uptake by institutional investors. Paul Tudor Jones, Stanley Druckenmiller, Grayscale, PayPal, Foursquare, MassMutual, MicroStrategy, Ruffer Investment Company — these are only a few of the corporate and institutional names that have added Bitcoin to their holdings.

Even Jim Cramer, the famed Television personality from CNBC'southward Mad Money, bought the recent Bitcoin dip under $eighteen,000.

Such names were absent from the retail-driven euphoria of 2017 when FOMO, or fear of missing out, was the main catalyst backside Bitcoin'due south brief spike towards $xx,000.

The rise of illiquid wallets

Another hit difference between the 2020 balderdash market and the one that preceded it in 2017 is the amount of Bitcoin held in then-called illiquid wallets.

Chainanalysis describes illiquid wallets, as well called investor-held Bitcoin, as wallets that send less than 25% of BTC they've ever received. Using this metric, illiquid wallets currently represent more than three-quarters (77%) of the 14.8 one thousand thousand BTC mined that isn't characterized equally lost. Chainanalysis says this corporeality "hasn't moved from its current accost in 5 years or longer."

The house explains:

"That leaves a puddle of just 3.4 one thousand thousand Bitcoin readily available to buyers every bit demand increases."

As the post-obit chart illustrates, the corporeality of "investor Bitcoin" held has surged dramatically since belatedly 2017 when prices concluding peaked. In other words, investors are buying and property BTC as opposed to flipping information technology for quick profits.

The striking divergence between "Trader Bitcoin" and "Investor Bitcoin" since 2017 by Chainanalysis

Steady growth of agile addresses, wallets holding at least 0.ane BTC

Different in 2017, when Bitcoin network activeness peaked with the BTC toll, the number of unique active addresses has grown steadily for the by two years, according to data provider Glassnode.

The number of unique active Bitcoin addresses compared with price past Glassnode

What'southward more, roughly 19.half-dozen million addresses either sent or received Bitcoin in November, marking the third-highest monthly total always recorded.

Data from Glassnode besides reveal that, past June of this twelvemonth, a record number of investors were holding at least 0.one BTC. Equally Cointelegraph reported, more than ii.75 million addresses accept been consistently property more than this amount since April 2019.