A new report from crypto-fund manager Grayscale Investments claims that the current market structure of Bitcoin (BTC) is “parallel to that of early 2016 before it began its historic bull run.”
Grayscale predicts that demand for Bitcoin will grow significantly as inflation accelerates, highlighting the need for a tight monetary commodity, and to support the use case of the cryptocurrency.
The report identifies several indicators on the chain that show growing interest in crypto, and notes an increase in the long-term stance on short-term speculation, amid historical declines for the number of Bitcoin held on exchanges.
Grayscale also notes that daily active addresses are at their highest level since all-time highs of 2017.
The report claims that the release of monetary policy from leaving the United States of the gold standard has created forward cycles of debt-ridden assets, followed by aggressive quantitative easing.
Grayscale notes the growing dependence of the U.S. economy on quantitative easing (money printing) to stay afloat and that history shows that it is an addiction that is difficult to stop. The S&P fell 20% in three months in response to the Federal Reserve’s fleet plans to reverse its monetary expansion in 2018.
Despite the US dollar remaining “structurally strong relative to other currencies”, the report claims that investors who are aware of inflation amid the “unusual monetary and fiscal stimulus” are looking for ways to protect against the ever-expanding money supply – support the cause for Bitcoin as a store of value.
Grayscale cites the scoring system used by hedge fund manager Paul Tudor Jones to assess Bitcoin’s attributes against cash, gold and financial assets and to determine the market’s growth potential.
If you quoted Jones, the report found:
‘What surprised me was […] that Bitcoin scored as high as it did. Bitcoin had a total score of almost 60% of that of financially, but has a market cap that is 1 / 1200th of that. It scored 66% gold as a store of value, but has a market cap that is 1/60th of the excellent value of gold. “
“Something is going wrong here and my idea is that it is the price of Bitcoin,” Jones concluded.
