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Pantera Capital CEO on How Current Bitcoin Rally Is Different From 2017 Rally

Dan Morehead, the founder, Co-CIO, and CEO of blockchain-focused investment firm Pantera Capital Management LP, talked about the current Bitcoin rally in his firm’s most recent monthly newsletter.

In the January 2021 issue of Pantera Blockchain Letter, which was published on Thursday (January 14), Morehead said that lately he get asked this a lot the following question: “Is this rally different?”

So, Morehead decided to share some of the differences he has observed between the current Bitcoin rally and the one that occurred in 2017:

With hindsight, 2017 is now officially a bubble.



The first massive difference is 2017’s rally was all about hype. In mid-2017 the world fell in love with newly-issued tokens — ICOs. They had existed since 2013… However, they were very rare — only a few meaningful projects a year. A variety of factors came together and the second half of 2017 was ICO mania. By the end of the year, we were getting fifty whitepapers a week.

Obviously it’s impossible to come up with 50 genius ideas each week, every week. Most of these projects were not useful. The market didn’t know that yet. A huge amount of money went into them. When bitcoin peaked in December 2017 it represented only 39% of the market cap of the industry. These ‘Other’ tokens were almost as valuable — 25%. Today bitcoin has almost doubled its share to 72% while the ‘Other’ category has fallen by 15 percentage points, to only 10%. A small corollary to that move is Ethereum gained share as well — from 12% to 14%.

There has been a massive shift from highly speculative, mainly non-functioning tokens having roughly half of the total market cap in 2017 — to today when the market cap is mainly in the two proven, functioning chains: Bitcoin and Ethereum. Those two chains have 86% of the value. The other 5,000 chains have 14%.

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