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Current crypto market looks similar to 2016

Current crypto market looks similar to 2016

One of the world’s largest cryptocurrency fund managers, Grayscale released a new report. The report, dubbed Valuing Bitcoin, analyses the current market by identifying on-chain indicators. The indicators provide a view of the growing interest in cryptocurrency.

Furthermore, the report concludes that more long-term investors are entering the market instead of short terms speculators. For example, the amount of Bitcoin held on exchanges is at its lowest since July 2019.

Another positive indicator is that the number of active addresses is at its highest since the end of 2017. Grayscale sees parallels between the current market and the market back in 2016. Back then, the market was preparing for its historic bull run, which resulted in Bitcoin reaching a height of almost $20.000.

One of the mentioned causes for the recent growth of the cryptocurrency market is the monetary policy of central banks worldwide in response to the COVID-19 outbreak. Quantitative easing has become the rule instead of exemption.

An interesting point within the report is that when using Grayscale’s scoring system to compare Bitcoin, gold and other financial assets. Bitcoin scored 66% of gold as a store of value, but its market capitalization is only 1,6% compared to that of gold.