Grayscale notes that long-term investors are increasingly dominating the Bitcoin markets compared to short-term speculators, increasing supply-related demand.
A new report by cryptocurrency manager Grayscale Investments argues that the current Bitcoin (BTC) market structure is “in line with what it was in early 2016, before the historic bull run began.”
Grayscale, supporting the use case of the cryptocurrency, emphasizing the need for a limited supply of monetary commodities; predicts that the demand for Bitcoin will increase significantly as inflation accelerates.
Grayscale also points out that daily active addresses are at their highest since 2017’s all-time highs.
Monetary Relaxation Policy Supports Crypto Coins
The report claims that monetary policy easing after the United States abandoned the gold standard created cycles of debt-fueled asset bubbles following aggressive monetary easing.
Grayscale points out the growing dependence of the US economy on monetary relaxation (printing money) to survive, and notes that this is a difficult dependency.
Although the US dollar remains “structurally strong compared to other currencies”, the report, along with “unprecedented monetary and fiscal incentives”, shows investors cautious against inflation; He argues that they are looking for ways to protect against the ever-expanding money supply. This takes us to Bitcoin as a store of value.
In addition, Grayscale research director Phil Bonello’s article “Understanding the Value of Bitcoin” mentions this value as follows:
“Because of Bitcoin’s verifiable scarcity and its unique qualities such as a supply that cannot be controlled by a central authority, we believe it can be used as a store of value and a way to escape this massive monetary inflation.”
Many investors, including the famous Paul Tudor Jones, have turned to Bitcoin in recent months to combat inflation as a result of the unprecedented coronavirus stimulus measures used by the US government and the Federal Reserve to support the economy.
As a result, the Bitcoin price hit its highest level since June last year, sparking a new wave of confidence among Bitcoin investors that it could return to an all-time high.
Rally Time in Bitcoin
There are those who think that after starting the year at under $ 1,000, it is back to a time when it rose to around $ 20,000 per Bitcoin in late 2017.
Joe DiPasquale, CEO of BitBull Capital, San Francisco-based Bitcoin and crypto hedge fund; “Bitcoin’s recent price action really came off the $ 10,000 level, which shows the market confidence of the big move at the end of July,” he said via email. said. The struggle to firmly overcome the $ 12,000 “barrier” may be “necessary for the market to cool and breathe.” Joe DiPasquale also highlighted:
“Going forward, we can expect it to rely on the $ 11,000 to $ 11,500 support zone to consolidate the market and make another move above $ 12,000.”
There Are Those Who Wait For The Bear In Bitcoin
Bitcoin surpassed $ 12,000 at the beginning of the week and had a great excitement for the community. But the leading cryptocurrency then suffered a rapid retreat. Bitcoin is being traded at $ 11,856 at the time of writing. So what’s the next target for BTC? Many analysts agree that the current situation is a bull market. In short, they state that despite this decrease, an increase will be experienced again. But there are also those who state that the market is giving bear signals.
Popular analyst Aayush Jindal states that Bitcoin has reached a critical juncture. BTC could also drop below the $ 11,500 critical support zone, according to Jindal.
Investors in HODL Mode
Another important name, CryptoQuant CEO Ki Young Ju, says that people keep their Bitcoins in their wallets. According to him, people switched to HODL mode in BTC. Ju said:
“People continue to worry about big sales like March, but there are no idle (waiting to be sold) Bitcoins on the exchanges as they were then. The #BTC exchange reserve reached its lowest level of the year and miners are holding it. I think the uptrend will not hurt. “