Bitcoin: Is This Time Different?




 

Bitcoin continued its rally this morning, surpassing $22,000. The move came after the Fed emphasized yesterday that the current pace of QE will endure for a considerable period — “until substantial further progress has been made” on unemployment and inflation goals. It was perceived as a longer-term dovish signal. In other words, the Fed is likely to keep expanding its balance sheet for a longer period than expected which clearly contrasts with Bitcoin scarcity.

 

 

The latest spike in Bitcoin price has been also explained by the ongoing avalanche of institutional investors who decided to jump in the crypto universe.

 

 

Other factors can also justify Bitcoin resurrection such as Improving network efficiency, Increasing number of users and Convergence with mainstream finance.

 

 

However, it’s also important to keep in mind that the latest move was violent and can be compared to 2017. Jean Charles Gand, Chief Technical Analyst at Market Securities, noted “The chart below shows a comparison between the Bitcoin parabolic move in 2017 and in 2020. The pattern created by the market participants repeats themselves because human nature is constant; just like fashions repeat, so market action repeats itself. A chart is a study of human behaviour, and that is the key to Technical Analysis.

 

 

Everybody knows how it ended in 2018. Now the question is clear: IS THIS TIME DIFFERENT?

 

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