The 2021 Bull Run

The 2021 bull run was different from 2017 in one fundamental way: institutions arrived.

In 2017, the surge was driven primarily by retail investors — individuals buying through exchanges, often for the first time. In 2020 and 2021, the demand came from a different place: hedge funds, family offices, publicly listed companies, and eventually asset managers managing billions of dollars.

The sequence of events was rapid. MicroStrategy’s August 2020 purchase opened the door. Square (now Block) added Bitcoin to its balance sheet. PayPal enabled Bitcoin buying for its 300 million users. Goldman Sachs restarted its cryptocurrency trading desk. The Grayscale Bitcoin Trust — a vehicle that allowed institutional investors to gain Bitcoin exposure without holding the asset directly — swelled to billions under management.

The narrative shifted from “speculative asset” to “institutional-grade store of value.” Bitcoin was increasingly compared to gold as a hedge against currency debasement rather than to technology stocks as a speculative bet.

By November 2021, Bitcoin reached $69,000. A new all-time high. Total crypto market capitalisation briefly exceeded $3 trillion.

And then, as always, it reversed. But the institutional infrastructure built during this period didn’t reverse. The custodians, the trading desks, the regulated products — all of it remained. The next cycle would start from a higher institutional baseline than the last.

Every cycle leaves permanent infrastructure behind. 2021 left the most yet.

Tomorrow: Luna and UST — the stablecoin collapse that wiped out $60 billion in weeks.

— The Daily Bit