Bloomberg gives four reasons why demand for Bitcoin is set to shoot higher

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To the credit of Mike McGlone, a senior commodity analyst at Bloomberg Intelligence, he called a Bitcoin breakout towards $13,000 when few expected it. The analyst doubled down on the positive sentiment he has been touting all year round in a study published Aug. 5.

The nine-page report, entitled “Bloomberg Crypto Outlook: Bitcoin Becoming Cautious,” outlined three primary explanations why BTC demand is expected to grow higher.

A rise in demand, assuming consistent supply, could fuel the cryptocurrency market further, already up approximately 80 percent on the year. According to CryptoSlate numbers, Bitcoin alone is up 65% in 2020.

Reason #1: Active Bitcoin address count continues to increase, suggesting a bull phase

The number of active BTC addresses has begun to tick higher because of Bitcoin’s growing acceptance as a financial asset and payment.

Bitcoin is currently 16.5% undervalued at $11,700, according to an attempt by McGlone and Bloomberg to link the price of the leading cryptocurrency to its active addresses (per Coin Metrics).

Santiment sees this development as a possible indication that Bitcoin’s price is “justified in sooner rather than later retesting the $12,000 mark.”

Reason #2: Grayscale continues to accumulate BTC en-masse

Grayscale Investments continues to accumulate BTC en-masse for its institutional investor clients.

“The Grayscale Bitcoin Trust now purportedly holds in excess of 400,000 BTC, around double that seen a year ago: By our calculation, GBTC inflows over the past year have absorbed about a third of new Bitcoin supply. If the inflow pace doesn’t subside, absorption will approach 50%, with less supply.”

The organization is also pulling in large quantities of Ethereum through its Grayscale Ether Trust.

Tangentially linked to this, the open interest of controlled BTC futures has shot up, reflecting, in our opinion, “accelerating maturation, and a tendency to price increase.”

Reason #3: Bitcoin’s correlation with gold is on the rise

bitcoin’s connection with the price of an ounce of gold has been on the rise because of macro factors and familiar narratives. “The 0.35” highest-ever 52-week Bitcoin-to-gold correlation indicates that the crypto-currency is gradually transforming into digital gold.

The now-correlated Bitcoin stands to benefit from money printing by central banks set to boost gold growth as it develops new all-time highs day after day.

Reason #4: Bollinger Band analysis predicts a BTC breakout towards $13,000

The technical indicator of the Bollinger Band textbook indicates an imminent “price breakout,” while charts show a step “higher is the least resistance direction.” This implies that BTC is likely to start a robust upward climb, which McGlone speculates would at least take the cryptocurrency to $13,000.

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