Bitcoin made history on Monday by breaking past its previous all-time high. While a near-term pullback could be possible, pundits have suggested that this rally is quite different from 2017 where bitcoin tickled the underbelly of $20,000 before crashing hard a month later.
One difference from the late December 2017 run? The current bull market has gained support from a new cadre of institutional investors. This summer, MicroStrategy invested almost $500 million in bitcoin; Square, PayPal, Stone Ridge, and Grayscale gobbled up gazillions of BTC and well-known wealthy investors like Paul Tudor Jones and Stan Druckenmiller praised the cryptocurrency. Most recently, institutional asset management giant Guggenheim revealed the possibility of investing at least $500 million in bitcoin via the Grayscale Bitcoin Trust. That said, bitcoin could continue to climb this year.
What’s more, a key on-chain metric is suggesting that bitcoin could be aiming for as high as $590,000 during the current bull run. According to data from on-chain analytics provider Glassnode, the Net Unrealized Profit/Loss (NUPL) has hit a level that typically drove the price of bitcoin significantly higher.
$590,000 On The Cards?
The CTO at Glassnode, Rafael Schultze-Kraft, observed this big bull signal in a tweet on Nov.30.
The NUPL currently stands at 0.62. Historically, reaching this level has ignited a bull run that only stalled after bitcoin had reached a fresh price range. For instance, in 2011, the bitcoin price surged by 3000% after the NUPL indicator flashed while in early 2013 it jumped by 800% before jumping another 600% later the same year. In 2017, the year when bitcoin registered an all-time high, the NUPL spurred 1200% gains.
The NUPL is a metric that estimates the difference between unrealized profit and unrealized loss in order to determine whether the bitcoin network is presently in profit or in loss. Any value above zero shows that the network is in profit and values smaller than zero show that the network is in a state of loss.
At this point, a reading of 0.8 or higher could fuel a frantic rally to anywhere between $133,000 and $590,000.
“This Is Just The Beginning”
Pseudonymous analyst PlanB who created the stock-to-flow model also shares the same view as the Glassnode CTO. In a tweet a few hours ago, PlanB noted that the “bull market is upon us”. He explained that the November red dot closed above all other previous red dots as expected.
The analyst expects high volatility along the way, and also new record highs. Just like Glassnode’s Schultz-Kraft, PlanB is of the opinion that the bitcoin bull run is only getting started. This means that bitcoin is likely to continue following its historical behavior “like clockwork”.
Bitcoin is trading at $18,914.02 at press time, gaining 5.12% over the past 24 hours. Now that bitcoin is currently in unchartered territory, there is really no telling what comes next for the bellwether cryptocurrency — but as PlanB says, “Enjoy the ride!”.
