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Bitcoin Market Looks Like 2016, Before Historic Bull Run

Grayscale notes that long term holders are increasingly dominating the Bitcoin markets over short-term speculators, driving demand relative to supply. A new report by crypto fund manager Grayscale Investments argues that the current Bitcoin (BTC) market structure “parallels that of early 2016 before it began its historic bull run.”

Bitcoin Market ‘Looks Like 2016, Before Historic Bull Run’

Grayscale predicts that demand for Bitcoin will significantly grow as inflation accelerates, highlighting the need for a scarce monetary commodity, bolstering the use-case of the cryptocurrency. The report identifies several on-chain indicators showing growing interest in crypto, noting an increase in long-term holding over short-term speculation, amid historic lows for the number of Bitcoin held on exchanges.

The report asserts that loosening monetary policy from the United States’ abandonment of the gold standard onwards have created cycles of debt-fuelled asset bubbles followed by aggressive quantitative easing. Grayscale notes the increasing dependence of the U.S. economy on quantitative easing (money printing) to stay afloat and that history shows it’s an addiction difficult to quit. The S&P dropped 20% over three months in response to the Federal Reserve floating plans to reverse its monetary expansion in 2018.

Grayscale also notes that daily active addresses are at their highest level since 2017’s all-time highs. The report asserts that loosening monetary policy from the United States’ abandonment of the gold standard onwards have created cycles of debt-fuelled asset bubbles followed by aggressive quantitative easing.

Source: FXPro