- Bitcoin was back in the news this week, with the British press commenting on its positive price action for the first time since 2017
- Some took this as a sign that Bitcoin was close to topping out, having ignored the signs three years ago
- There are other factors that illustrate Bitcoin’s place in the hype cycle, and were nowhere near the end
Bitcoin’s recent price action finally caught the attention of the mainstream media this week, which some took as a sign that the bull run was over. However, while the reemergence of Bitcoin among the world’s media organizations is a sign of things hotting up, it has to be looked at in context with other factors. When you do this, it’s easy to see that rather than it being the end, things are just getting started.
Yes, it was good (in some ways) to see Bitcoin talked about in the news again, which was a feature of the crazy times we saw in December 2017, and it might be tempting to think that press exposure means the top is getting close.
However, news about Bitcoin’s price action received very limited exposure. With everything else going on in the world it was hardly a surprise that the story quickly vanished underneath other headlines as if it was never there. It also failed to make it to America where it would have most impact, which just shows the limited exposure it got overall, something that chimes with recent trends:
Media attention going down. Price to the moon!!
— Mati Greenspan (tweets ≠ financial advice) (@MatiGreenspan) November 17, 2020
Unless China is banning Bitcoin in some way and the world’s press are reveling in it, we are not close to the top.
Talking of trends, if we take a look at the Google trends search record for ‘Bitcoin’ we can see that the press coverage made what appears to be a substantial impact on Bitcoin searches, with a 78% rise on the day the stories appeared:
However, we can also see that the search numbers then dropped down just as fast, leaving it exactly where it was before the news broke. As our piece on Bitcoin’s Google search record from two weeks ago illustrates, Bitcoin trend levels are still way off where they were at the top of the last bull run:
This data suggests that we have a huge way to go before we can confidently say that everyone is talking about Bitcoin again, which is when the final buying phase occurs.
Wrong Part of the Bitcoin Cycle
The timing of the press coverage also shows that Bitcoin holders don’t have too much to fear about a topping out just yet. In 2017, the almost incessant press coverage came at a time when Bitcoin was more than two years into its bull market. This time around, the coverage, such as it was, has come at a time when Bitcoin is only five months into its new bull market.
Take this example. In June 2016, Bitcoin found itself 250% up on its August 2015 price, which was when it had officially broken out of its bear market. It had spent the two weeks prior almost doubling in price, and guess what happened as a result? News stories appeared about how the Bitcoin price was “skyrocketing” and “surging to $650”. Sound familiar?
We all know what happened next, and anyone selling at $650 got a rude awakening when the market topped out 18 months later.
Context is Key
It is tempting for those who have been stung with their first bear market to be on the lookout for signs that a market is topping out. This is natural, but it ignores history. Markets go in cycles and have patterns that play out again and again.
Media exposure of a bull market in any asset is a sign that things are going in the right direction, but everything has to be viewed in context. If that media exposure is isolated, small scale, comes at the start of a new market cycle, and does not result in a flood of new entrants to the market then it is not a sign that the market is topping out.
Given all this we can say with confidence that, no, the recent press coverage did not put the kibosh on the Bitcoin bull market.