What are people doing on these systems? Usually to say “generating cashflows” means some kind of productive business activity.
Are people actually touching the real economy or just trading coins amongst other people in the crypto world?
I'm fairly new to Crypto so I don't understand this: it's looking like all cool new things are built on Ethereum (which, itself has grown quite a lot) so why is Bitcoin rising? How are Bitcoin & advances in Ethereum-based techonologies correlated?
Bitcoin as collateral. Given many people got extremely rich off of bitcoin, they can use bitcoin as collateral for altcoins.
Wrapped bitcoin. Bitcoin can be wrapped in a ERC-20 ETH token backed be an actual bitcoin, similar to stablecoins (USDT, USDC, etc.) and traded using smart contracts
The first is that Bitcoin is thriving as a store of value. It hasn't seen much adoption as a payments system and is unlikely to do so in the future, but 2020 saw many notable people using adopting Bitcoin as a store of value. See MassMutual, Paul Tudor Jones, Stan Druckenmiller, Tesla, among many other examples.
The second reason is that defi protocols grew in usage by an insane amount in 2020. Decentralized exchanges like Uniswap are beating centralized exchanges in volume and lending protocols like Aave have billions deposited in them. These defi protocols are generating huge cash flows. This is real people using decentralized technologies built on blockchains like Ethereum.
Even if the 2021 bull run ends up like a bubble, 2021 will be different in that a lot of the price rises will be based on fundamentals, not pure speculation like in 2017. One thing to note though is that a Bubble is not necessarily a bad thing. In every past Bitcoin "bubble" (2011, 2014, 2017 etc) the price Bitcoin crashed to has always been higher than the price it started the run up at.