Is Bitcoin About to Melt Up?
As of writing this, Bitcoin is up over 10% today, and has increased in value by over $1,000 in the last 24 hours.
Bitcoin has a history of major upwards moves over the course of a few days (or hours) that are followed by weeks worth of price consolidation and lowered volatility. We have no reason to suspect that this time will be any different.
Except for, well, maybe we do?
A lot of news has come out about Bitcoin over the last few months that is extremely bullish. Major institutions are beginning to convert their USD treasuries into bitcoin. Paypal is going to begin allowing users to buy bitcoin directly. More “whale investors” are moving their bitcoin’s off exchanges and into long-term cold storage.
The narrative of bitcoin as a store of value and wealth protection vehicle has never been stronger, all this during a time when asset protection has never been more important.
At the same time, bitcoin’s price has broken into a territory above $13,000 that has rarely ever been visited in bitcoin’s history. This will lead to further volatility. The sell side liquidity is thin. Buyers will need to pay a premium to get a good fill — and any dips in price will be consumed by eager buyers.
Furthermore, Bitcoin’s market cap is closing in on all time highs. While Bitcoin’s price still has a little ways to go (53%) to get to all time highs, it’s market cap is only 34% away. Demand has never been higher!
Just like Bitcoin saw a meltdown in early March, it is totally possible that bitcoin could see a melt up before the end of this year that could take us above or at least close to all time highs. I think that it is reasonable to assume that the narrative around bitcoin is changing, and a massive flood of money is trying to get in.
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