Bitcoin surpasses $28,000 for the First Time in History
In the first week of December, the bitcoin Santa rally seemed like a distant possibility for investors struggling to regain a bull-market perspective after three years of depressive price-action.
But over the weekend, bitcoin showed the world that a new way of thinking is emerging — pioneered by none other than the grass-roots believers who made it all possible.
Let’s dig in.
Bitcoin tops $28,000 for the first time
Hours after tearing through $27,000 for the first time ever, bitcoin surged past $28,000 on Sunday morning as the pioneer crypto continued its market domination to surpass $500 billion in total market capitalisation.
This month, bitcoin has left a string of broken records in its wake after passing the psychological $20,000 landmark for the first time on December 16th.
Gripped by unrelenting bullish fervour, a religiously devoted grassroots following, and near-zero tolerance for legacy financial shenanigans, bitcoin holders have now glimpsed the peripheries of what ideas can achieve.
The initial stages are arguably the hardest as bitcoin struggled for recognition — but those days are now gone as bitcoin has achieved the status of a macro institutional asset, and a cheap one at that.
Indeed, you’d be hard-pressed to find any macro-asset class that isn’t valued in the trillions, and yet bitcoin’s market cap is still only half a trillion dollars.
In light of this backdrop, institutional investors continue to drive the Santa rally. Anthony Scaramucci’s Skybridge Capita, MassMutual, and Guggenheim’s $5 billion macro funds are the latest institutional-grade investors to join their peers who entered the market earlier in 2020.
Scaramucci believes that bitcoin is in the “early innings” of a bitcoin boom, the scale of which isn’t fully appreciated today. This weekend, early bitcoin evangelist Tim Draper — who bought millions of bitcoin at $800 said that he expected bitcoin’s price to increase ten-fold by the end of 2022 from here.
With the year-end just around the corner, there isn’t a single serious institution that is still voicing concerns about bitcoin aside from how to get more of it.
And can you really blame them? The narrative has changed — bureaucrats are competing against each other as to who can print the most money, economies are at a standstill and the consequences of record-breaking unemployment is on the horizon. This means that stores of value just became a lot more valuable, and that’s just the tip of the iceberg with regards to bitcoin.
Not to sound preachy, but this is one of those rare moments in history where virtue and profit coincide.
Nothing about the bitcoin protocol speaks to ill or nefarious intent. It is as close to divine retribution as you will ever get and it’s coming at lightning speed.
Beneath bitcoin there is an idea, and ideas are bulletproof.
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Bitcoin Net Unrealised Profit/Loss (NUPL) traverses the ‘belief stage’
Bitcoin is in uncharted territory.
As such, standard technical analysis that relies on historical precedent cannot be used optimally.
However, on-chain metrics such as bitcoin’s NUPL chart can give an indication as to where bitcoin is within the cycle.
The Net Unrealised Profit/Loss (NUPL) metric looks at the difference between unrealised profits and unrealised losses in order to determine whether the network as a whole is currently in a state of profit or loss.
Currently, bitcoin is traversing within the ‘belief-denial’ stage where volatility accelerates in a heated market. However, once the NUPL reaches the blue area, then euphoria and greed will have taken over, indicating frothy market conditions.
Eventually, level heads will prevail but not before euphoria is flushed out.
According to data from Glassnode, bitcoin will probably enter this euphoric zone in the first quarter of 2021, at which point the risk for downside volatility is highest.
Onward bitcoin Spartans!
Catch you next time.
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Read More: Guggenheim CIO: “bitcoin should be worth about $400,000”
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Originally published at https://mailchi.mp.