The Broad View
Bitcoin has finally broken through the $800 barrier. On December 20, 2016, the world’s first cryptocurrency surged past a level that has served as both psychological resistance and technical ceiling since February 2014. At $800.88 per coin with a market capitalization of $12.86 billion, Bitcoin is cementing its position as the best-performing asset of 2016, having gained roughly 80% year-to-date in a rally that shows no signs of exhaustion.
The breakout is not happening in isolation. The broader cryptocurrency market is experiencing a coordinated expansion. Ethereum Classic has surged over 30% in recent days. Iconomi gained 10.59% in 24 hours. The total crypto market is drawing fresh capital from multiple sources — Chinese investors fleeing yuan depreciation, technology enthusiasts betting on blockchain infrastructure, and institutional players who can no longer ignore the asset class. This is not a single-coin story. This is a market repricing event.
Key Support and Resistance
From a technical perspective, the $800 level has been a magnet for Bitcoin’s price action for nearly three years. The cryptocurrency first reached this level in early 2014 during the post-Mt. Gox upheaval, only to collapse below $400 and enter a prolonged bear market. Every attempt to reclaim $800 since then has been met with aggressive selling. Until now.
The breakout on December 20 confirms what chartists have been watching for months: a series of higher lows throughout 2016, each one building a base of support. The July halving — which reduced block rewards from 25 to 12.5 BTC — created a supply shock that has been gradually absorbed by growing demand. The $788.49 high reached on December 13 served as a preliminary test. Bitcoin lingered below $800 for the better part of the following week before finally breaking through with conviction on December 20.
Key resistance now shifts to the $900-$1,000 range, last seen in November 2013. Support has formed at $770-$780, the previous consolidation zone. The moving averages are aligned bullishly, with shorter-term averages firmly above longer-term ones — a classic trending market structure.
Institutional Flows
The rally is increasingly being driven by institutional capital. Peter Smith, CEO of Blockchain, reports consistent week-over-week growth in the company’s consumer business, projecting that Q4 2016 will nearly double previous quarters. The addition of former Barclays CEO Anthony Jenkins to Blockchain’s board signals that traditional finance is not just observing cryptocurrency — it is joining it.
Bobby Lee, CEO of BTC China, attributes much of the demand to Chinese capital seeking refuge from yuan depreciation. The Chinese yuan has weakened steadily against the US dollar throughout 2016, prompting investors to explore alternative stores of value. Bitcoin, with its fixed supply of 21 million coins and borderless transferability, serves as a digital safe haven for capital that cannot easily leave China through traditional channels.
Japanese regulatory clarity is also contributing to institutional confidence. The 2016 amendment to Japan’s Payment Services Act, which formally recognizes Bitcoin as a legitimate payment method, has removed one of the largest sources of uncertainty for institutional allocators considering cryptocurrency exposure. When the world’s third-largest economy provides legal legitimacy to an asset, the risk calculus changes fundamentally.
Sentiment Indicators
Beyond the technicals and the institutional flows, market sentiment has shifted palpably. Money Morning published a roundup of 2017 Bitcoin price predictions from 11 top influencers on December 20, and the consensus is overwhelmingly bullish. Forecasts range from conservative estimates of $1,000-$1,500 to aggressive projections exceeding $3,000, driven by expectations of continued adoption and supply constraints.
Trading volume tells its own story. Bitcoin’s 24-hour volume reached $99.6 million on December 20, a significant increase from $60.5 million just two days earlier. This volume expansion confirms that the breakout is backed by genuine buying pressure, not just thin order books and low liquidity. The market depth is improving, with major exchanges reporting tighter spreads and larger order sizes.
However, caution is warranted. The rapid price appreciation has drawn comparisons to previous bubbles, most notably the November 2013 rally that saw Bitcoin surge from $200 to $1,100 in weeks before collapsing. The difference this time is infrastructure maturity: regulated exchanges, institutional custody solutions, and regulatory frameworks did not exist three years ago.
The Bull/Bear Case
The bull case is straightforward. Bitcoin’s supply growth rate has been cut in half by the July halving. Demand is increasing from Chinese capital flight, Japanese regulatory legitimization, and growing institutional interest. Network hash rate continues to set records, indicating that miners are investing in long-term infrastructure. The $800 breakout is technically significant and opens the path to $1,000, which would trigger additional media attention and retail investor FOMO.
The bear case requires more nuance. Chinese regulators have begun probing bitcoin exchanges amid concerns about capital flight, and any crackdown could remove a major source of demand. The $800 level has historically been a false breakout zone. And the concentration of wealth in early adopters — as the Forbes SIM swap investigation painfully illustrates — means that a small number of holders could crash the market if they choose to exit simultaneously.
As of December 20, 2016, Bitcoin trades at $800.88. Ethereum sits at $7.66 with a market cap of $667 million. The total cryptocurrency market is expanding, capital is rotating, and the year-end rally has the feel of something bigger than a seasonal spike. Whether this marks the beginning of Bitcoin’s next major bull run or a final exuberant push before correction depends entirely on whether the new institutional capital holds or flees at the first sign of trouble.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.
80% ytd gains and barely anyone outside crypto is paying attention. wait until mainstream media catches the $800 headline
Iconomi gaining 10.59% in 24h on the BTC breakout. remember when that was considered a major altcoin move? feels quaint now
mainstream media didnt care until BTC hit $1000. the $800 breakout was just crypto twitter celebrating as usual
ETC +30%, Iconomi +10%, BTC breaking $800. the capital rotation is real. money is flowing from fiat to crypto across the board
capital rotation from yuan to BTC was the real driver that december. chinese otc volume was insane
chinese OTC premium was running 5-10% above spot back then. classic tell that capital flight was the real driver, not speculative hype
Chinese OTC premium running 5-10% above spot tells you everything. yuan depreciation was the macro driver, not tech hype
BTC at $800 with a $12.86B market cap. we were so early. ETH was under $10 around this same time. those were the days