The Bitcoin price is scratching the USD 16,000 mark and could tackle the all-time high of USD 20,000 as a result of a supply shock.
Despite the parabolic rise, the current rally could be fundamentally different from 2017.
Bitcoin investors are currently experiencing a rally that should remind many long-time residents of the Bull Run of 2017. After Bitcoin traded at just over USD 14,000 yesterday, the price has risen by more than USD 1,500 during the day. The last time this happened was during the legendary Bull Run in 2017. At the time of writing, BTC was USD 15,764 and was briefly scratching the USD 16,000 mark.

Bitcoin has thus reached its highest price since January 8, 2018, certain parallels to the Bull Run of 2017 are currently inevitable. The current price movement seems to be driven by a strong FOMO (“fear of missing out”) effect. At least this is what the so-called “Fear and Gread Index” says, which tries to measure the mood in the market.

The index has risen from 72 to 90 yesterday, which means the market is now in an “extreme greed” state, according to the index. The last time the index topped 90 was in June 2019 when BTC hit its yearly high of $ 13,900. However, not all experts are convinced that Bitcoin is actually “overbought”.

The founder of Capriole Investments, Charles Edwards, explained that the situation is fundamentally different than in 2017. Edwards pointed out in a newsletter to investors that there was a massive migration of Bitcoin reserves to crypto exchanges this year. Bitcoin stocks on the exchanges have decreased by 25%.

The shortage of tradable Bitcoin, according to Edwards, is currently “causing a supply shock to potential buyers, which was probably also triggered by the halving dynamic” and increasing the likelihood of positive price movements. Edwards also wrote on Twitter that “19K are more likely at the moment than a drop to 12K”. Edwards also referred to the latest news that Square sold twice as many bitcoins in the third quarter as were mined worldwide.

This, together with the PayPal news and the constantly new records from Grayscale Investments, which bought 77% of all new bitcoins in the third quarter, seem to support the theory of the supply shock from Edwards.

$ 16,000 is the final resistance before a new Bitcoin all-time high
A key level for another Bitcoin rally could be the $ 16,000 mark, as there were two weekly closing prices at $ 16,100 in early January 2018. So if this week’s candle can hold these levels, there could be a surge towards this elusive all-time high. With this in mind, the renowned analyst Michael van de Poppe wrote:

The past few hours have been accelerating as we get closer to the next $ 16,000 weekly level. US stocks are doing their job too, having risen about 7% (Nasdaq) in the past 36 hours. Let’s see where BTC will end up, before or after $ 16,000.

Analyst Credible Crypto pointed out that yesterday’s price movement broke the rising trendline, which could mean the attack on the all-time high at USD 20,000. Still, he also warned that it could be a false outbreak. In this case, the analyst sees the level around 13,500 as the first support:

Our trend line has been broken. Nevertheless, we are now pushing for the HTF [Higher Time Frame] supply, the last major obstacle before the new ATH. It is very possible that this break in the TL [trend line] is just a throw-over (false breakout), and there is simply no way to justify longing for this coverage area.