Widely followed on-chain analyst Willy Woo says Bitcoin (BTC) traders shouldn’t expect the current market cycle to end up resembling the 2013 BTC bull run.

In a new episode of What Bitcoin Did with Peter McCormack, Woo says the crypto space has a “cycle imprint” in which traders are looking too much at past bull runs in order to time the current one.

Woo says that some traders might be hoping that Bitcoin experiences something similar to its 2013 mid-cycle crash, in which the flagship cryptocurrency dropped nearly 80% before breaking new highs.

“We’ve got this cycle imprint. People are now cycle-imprinting 2013 now that we’ve got this big dent in the bull market. I think everyone’s now agreeing that it is still a bull market, and now we’re cycling back to 2013…

I’m beginning to think this is not going to happen. I’m actually siding towards this being unlike anything. I think we’ll go past the end of this year, and there’s a fair amount of likelihood that it won’t come into a full-blown bear market like we saw in the prior cycles, and then people start talking about the extended cycle theory.”

According to the closely followed analyst, Bitcoin is more likely to experience a random grind upwards with less dramatic peaks and shorter bear trends.

“I think this thing is just going to do a crazy wander around demand and supply and the halvening has less impact. And maybe Michael Saylor is right: there is no top. It just keeps wandering and discovering. You might have things that we just experienced, mini-bear seasons.”

In June, MicroStrategy CEO Michael Saylor outlined a slew of catalysts that he believes can drive Bitcoin’s price in the coming years.

As for the current state of Bitcoin, Woo names the $42,000 level as the key area to break before BTC can start challenging the $50,000-$60,000 range. At time of writing, Bitcoin is trading at $39,120, according to CoinGecko.

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Reverse repos are short term purchase agreement where banks give cash to Fed in return for bonds with the Fed currently paying them 0.05% interest during the duration of that agreement.

The big question is why this is now finding so much usage with the dominant explanation being that there’s just too much cash flowing around in the system.

Banks don’t know where to park it and apparently they have no better place than a facility which pays 0.05% in interest, with the stock market plunge in China potentially being one contributor to this surge (pictured).

An estimated $1 trillion has been lost in value in Chinese stocks trading in Asia and USA with that money potentially now temporarily parking before finding a new investment.

Some may have gone towards bitcoin or are on their way, but some suggest this reverse repo surge may continue, potentially hitting $2 trillion.

Deposited cash for banks is a liability so they try and balance by turning that liability into a bond asset, but it may be demand for bonds is now so high that it overspills to repo reserves.

That still however implies people are holding too much cash instead of investing it, with the velocity of money continuing to plunge:

That’s while stocks have added another $26 trillion globally, or 30% of its previous all time high, with house prices increasing as well, as are commodity prices.

Yet there’s still so much cash in the system, it’s happy to park at almost zero percent in interest while inflation reached 5.4% in June.

One big reason may well be because wages are not quite keeping up, with all the tech giants announcing record profits waiting for somewhere to invest.

All of that suggests asset prices will go higher to readjust for the new fiat supply with Fed maintaining the emergency measures while China is seemingly moving towards monetary easing.

Cash may be king when it comes to purchasing Bitcoin (BTC), as recent data states that there has been a spike in crypto ATM installations during 2021, showing a 71.3% increase from Jan. 1, 2021, until the time of reporting. Specifically speaking, there are currently over 24,000 crypto ATMs located across the globe. Data further suggests that crypto ATMs are being installed at a rate of about 52.3 machines per day.

While growth is clearly underway for the cryptocurrency sector, the reason behind the surge in crypto ATMs may be due to a demand for using cash to buy Bitcoin. Alona Lubovnaya, director of product operations for Bitcoin Depot — a Bitcoin ATM operator — told Cointelegraph that more people from all walks of life are becoming interested in crypto, particularly the underbanked community. “We’ve entered a new era where traditional bank accounts can be replaced with digital wallets, and because of this, more people are choosing to buy crypto with cash.”

Cash is easy and familiar for the mainstream

While there are many reasons as to why certain individuals would want to buy cryptocurrency from an ATM versus an exchange, most of the common use cases seem to be focused on easy and quick access to crypto.

For instance, one piece of research claims that over 50 million Americans are likely to buy cryptocurrency in the next year. Findings also indicate that a lack of understanding is the biggest barrier for new investors. Specifically, 20% of those surveyed said that they still don’t understand how to buy cryptocurrency.

Derek Muhney, director of marketing and strategy at Coinsource — a provider of Bitcoin ATMs — told Cointelegraph that many people looking to get started with crypto value the haptic element of a physical machine, such as an ATM. According to Muhney, Bitcoin ATMs are the best way to buy Bitcoin for an increasing target group of unbanked and underbanked. While this may be obvious, Muhney further pointed out that this has become the case with baby boomers and millennials, noting that these users make up the lion’s share of Bitcoin ATM transaction volumes to date.

Echoing Muhney, Ben Weiss, CEO of CoinFlip — a Chicago-based Bitcoin ATM operator — told Cointelegraph that Bitcoin ATMs function primarily to make crypto digestible and attainable to new users who may not understand the intricacies of cryptocurrency or blockchain technology. To demonstrate this point, CoinFlip conducted a Twitter poll to find out how many people on Crypto Twitter have used a Bitcoin ATM. CoinFlip’s survey revealed that 72.2% of individuals never used a Bitcoin ATM, while only 27.8% noted they have.

Weiss explained that he wasn’t surprised by these results, noting that Crypto Twitter is composed of people who are passionate about cryptocurrency and have a relatively deep understanding of the technology. As such, Weiss commented that mainstream users are the primary customers of Bitcoin ATMs:

“Using a crypto ATM is the simplest way of purchasing crypto. You don’t have to wait weeks or months for verification and will normally receive your crypto before you get back to your car. People understand ATMs, and crypto ATMs are not too different of a concept.”

Alex Mashinsky, CEO and co-founder of Celsius — a centralized cryptocurrency lending platform — further elaborated on this, noting that there are many groups of customers in the crypto space. For example, Mashinsky explained that hodlers will never sell their crypto, while speculators aim to time the market. Yet, Mashinsky noted that “tourist” users will be the ones to likely leverage a Bitcoin ATM. Mashinsky added:

“For temp workers and the 25% of those who do not have a bank account, a Bitcoin ATM is cheaper than Western Union or a bank wire. This segment will continue to grow and take market share from traditional finance companies that overcharge their clients.”

Bitcoin ATMs will grow, but security concerns remain

Considering the fact that over 6% of United States households, or a total of 14.1 million American adults, are currently unbanked, Bitcoin ATMs will undoubtedly multiply moving forward. The estimate, further supported by Muhney, suggests that “more than 100,000 Bitcoin ATMs will be installed by 2025 and that the industry will grow to beyond $1.7 billion.”

While this is notable for the growing cryptocurrency sector, security challenges may hamper adoption. John Jefferies, chief financial analyst of CipherTrace — a cryptocurrency intelligence firm — told Cointelegraph that as recently as last year, Bitcoin ATMs operating in Canada did not require any form of Know Your Customer, or KYC, processes. “None of these Bitcoin ATMs required KYC, making these the wild west,” Jefferies said. As the crypto space matured, Jefferies noted that the majority of Bitcoin ATMs in the U.S. now require KYC from users:

“KYC is critical for these money service businesses to become a part of the traditional financial system. We are now seeing a lot of Bitcoin ATM vendors (those who make the hardware), along with the operators, focused on compliance.”

Jefferies added that this has also become the case due to examinations from entities like the Internal Revenue Service, or IRS: “Similar to traditional money services businesses, Bitcoin ATM providers will get visited by examiners. The IRS does this for the Financial Crimes Enforcement Network.”

Moreover, Jefferies pointed out that CipherTrace is starting to see Bitcoin ATM providers take an interest in a solution to comply with the travel rule. The Financial Action Task Force’s (FATF’s) Travel Rule came into effect for Virtual Asset Service Providers, or VASPs, in 2020. The Travel Rule requires regulators and VASPs to collect and share customer data during transactions.

According to Jefferies, CipherTrace is working with six Bitcoin ATM operators to apply a travel rule solution called “Traveler” to specifically address the counterparty VASP’s due diligence that is demanded by the FATF guidelines. While the Traveler tool was recently implemented by some exchanges like Binance and Crypto.com, Jefferies shared that CipherTrace is making the product more viable for Bitcoin ATM operators to be compliant.

Related: Crypto cowboys: Texas counties welcome Bitcoin miners with open arms

Although this may be, some industry experts believe that Bitcoin ATMs are just as safe as traditional ATMs. Jonathan Ovadia, CEO and co-founder of Ovex — a South Africa cryptocurrency exchange — told Cointelegraph that based on the company’s research, “we don’t believe Bitcoin ATMs will be used for extremely large transactions.” As such, Ovadia noted that there is no need for specialized security compared to regular ATMs, both in terms of physical and cybersecurity.

Eric Grill, CEO of Chainbytes — a Bitcoin ATM manufacturer — told Cointelegraph that the company operates HippoAtm.com, charging a hefty 17% fee per transaction. Grill shared that the average transaction amount on HippoAtm.com machines was $1183.92 for July 2021 and $1325.98 for June 2021.

This is an important point to consider in terms of security. Jefferies shared that Bitcoin ATMs processing large transactions may be suspicious. For example, Jefferies referenced that in August 2019, Kunal Kalra, also known as “shecklemayne,” was operating an unlicensed money services business where he exchanged U.S. dollars for Bitcoin and vice versa. According to Jefferies, Kalra worked on commission and only dealt with customers willing to exchange at least $5,000 per transaction.

Despite these concerns, Bitcoin ATM providers remain optimistic. Muhney stated that Coinsource end-users have already invested “several hundreds of millions” into Bitcoin. “This is why we are extremely bullish about the next phase of spike adoption, similar to 2017/2018, which we expect for the second half of 2021.”