Bitcoin Market Is Looking ‘Like Early 2016’—Just Before The Bitcoin Price Exploded

 Bitcoin, along with the wider cryptocurrency market, has come to life over the last few months.

 

The bitcoin price, after crashing to under $4,000 per bitcoin in the broad March coronavirus crash, has bounced to around $12,000—boosted by some high-profile investors betting on bitcoin.

 

Now, bitcoin and cryptocurrency asset manager Grayscale has said "the current bitcoin market structure parallels that of early 2016 before [bitcoin] began its historic bull run,"—meaning the bitcoin price could be headed sharply higher.

 

"Amidst unprecedented monetary and fiscal stimulus, investors are searching for ways to protect against an ever-expanding monetary supply," Grayscale research director Phil Bonello wrote in a report titled Making Sense of Bitcoin’s Value, outlining different ways of valuing bitcoin.

 

"Because of bitcoin’s unique qualities—such as its verifiable scarcity and a supply that can’t be controlled by a central authority—we believe it can be leveraged as a store of value and as a way to escape this great monetary inflation."

 

A number of investors, including the famed Paul Tudor Jones, have turned to bitcoin in recent months to combat the inflation they see coming as a result of the unprecedented coronavirus stimulus measures the U.S. government and the Federal Reserve have used to prop up the economy.

 

As a result, the bitcoin price has climbed to its highest since June last year and sparked a fresh wave of confidence among bitcoin investors that it could be heading back to its all-time highs.

 

Bitcoin soared to around $20,000 per bitcoin in late 2017 after starting the year at under $1,000, propelled by a retail investor gold rush that some think might be restarting.

 

"Bitcoin’s recent price action really took off from the $10,000 level, indicating market confidence in the big move at the end of July," Joe DiPasquale the chief executive of San Francisco-based bitcoin and crypto hedge fund BitBull Capital said via email, adding bitcoin's struggle to get firmly past the $12,000 "hurdle" could be "necessary for the market to cool down and catch a breath."

 

"Moving forward, we can expect the market to lean on the support zone between $11,000 and $11,500 to consolidate and try another push above $12,000."