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.”