Bitcoin price hits new all-time high as crypto market matures

Three major trends are behind Bitcoin's successful journey to a new all-time high above $19,892.

Bitcoin (BTC) price has officially reached a new all-time high on Dec. 1 above $19,892 after nearly three years, according to data from Coinbase and Tradingview.

BTC/USD weekly chart (Coinbase). Source: Tradingview.com

Despite the Thanksgiving crash last week, BTC price has managed to rebound throughout the weekend. BTC then easily passed the $19,000 mark on Monday to reach its all-time high, albeit on a couple of exchanges.

There are three key trends that fueled BTC's rise from sub-$3,600 in March to over $19,892. These include the rise in institutional demand, lower selling pressure, and the resilience of BTC throughout 2020.

Data suggests institutional demand propelled the rally

Most on-chain data points show that the demand for Bitcoin from institutions has been rapidly increasing.

In November, Grayscale recorded all-time high net inflows, and the CME Bitcoin futures market saw its open interest climb near $1 billion.

Grayscale, in particular, said that more institutions invested in cryptocurrencies during the third quarter of 2020 than ever before.

The figures Grayscale sees are important to gauge the institutional interest in Bitcoin because the Grayscale Bitcoin Trust is typically the first point of entry for most institutions to gain exposure to BTC.

In the United States, there is no exchange-traded fund (ETF) for Bitcoin and other major cryptocurrencies. Hence, the Grayscale Bitcoin Trust is the closest investment vehicle to an ETF in the U.S. market. The Grayscale report read:

“More institutions invested in 3Q20 than ever before and have increased their average allocation from $2.2 million in 3Q19 to $2.9 million in 3Q20. Institutions that are comfortable with multiple products within the Grayscale suite of products, have averaged nearly double the commitments of single-product investors during 3Q20.”

As Cointelegraph reported in August, MicroStrategy purchased $450 million worth of BTC, adopting Bitcoin as its primary treasury asset. This was likely the spark that triggered the current wave of institutional demand for the digital store of value.

This was accompanied throughout the summer by high-profile allocations to Bitcoin from the likes of Square, Paul Tudor Jones, and later Stanley Druckenmiller, which only further fueled the positive market sentiment.

I call this chart "The Traditional Onslaught".

We've been talking about "The Herd" for 3+ years. The Herd requires career risk cover. This is that.

They are by definition not early adopters, but their pockets are deep & their capital is sticky. #Bitcoin is just getting started. pic.twitter.com/jC7uVBXxxW

— Travis Kling (@Travis_Kling) November 30, 2020

In November, Druckenmiller explained that Bitcoin is likely here to stay as it has significantly outperformed gold in 2020, saying:

"It’s been around for 13 years and with each passing day it picks up more of its stabilization as a brand."

Low whale inflows

Six months after the halving, November also saw low selling pressure from whales according to on-chain data. In other words, the amount of Bitcoin being sent to exchanges from high-net-worth investors have been consistently decreasing throughout the month.

Bitcoin Exchange Whale Ratio. Source: CryptoQuant

CryptoQuant CEO Ki Young Ju pinpointed the Exchange Whale Ratio as an indicator for long-term bullish market sentiment. He said:

“Dear $BTC shorters, You can call me a moon boy, but unfortunately, there won't be a mass-dumping like March this year. Exchange Whale Ratio(90-day MA) is still very low. Long-term bullish is inevitable.”

The low selling pressure on BTC helped sustain its rally throughout the month, eventually allowing the dominant cryptocurrency to reach a record high.

Bitcoin's resilience has been a big factor

On June 13, JPMorgan said in a note that Bitcoin’s recovery from the March crash showed it had staying power. The recognition of Bitcoin’s resilience by the largest investment bank in the U.S. likely acted as a major confidence boost, especially for institutional investors.

Ultimately, the impressive performance over the past decade and Bitcoin's strong momentum since dropping below $3,600 across major exchanges in March demonstrated BTC’s resilience and long-term potential as a digital store of value. 

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Report: ICOs left retail investors in the dark

New, small-scale research from Xangle takes a look at investors’ reflections on their initial coin offering investments between 2017 and fall 2020.

Research outfit Xangle has found that a third of sampled retail investors in the United States felt “deceived” by initial coin offerings, or that the projects had withheld information from them.

Notably, Xangle’s survey is small-scale, based on 600 respondents who invested in an ICO sometime between 2017 and October 2020. The majority (44%) of those surveyed were between 25 and 44 years old, with more women represented than men, at 58%. 

On this basis, Xangle suggests there is “no such thing as a typical ICO investor,” though it does not give more insights into its survey methodology and choice of respondents. 

However, Xangle does note that surveyed retail investors were not confined to those caught up in the early ICO boom. Only 22% of the respondents first invested in 2017, whereas 35% first invested in 2018, 26% in 2019 and 9% in 2020.

The lion’s share of respondents (46.7%) invested a small sum, less than $1,000. After this, a significant share of investors (29.2%) invested between $1,001 and $10,000. Close to 8% invested between $10,001 and $20,000.

Informal ties and word-of-mouth played an outsized role in these investors’ decisions: 45.7% said that either friends, family or co-workers were the source of information for the ICO they chose to invest in. After this, media coverage, forums and social media sites were the source of information for 15%, 19.2% and 17.7%  of investors, respectively.

Close to 55% of respondents invested in the ICO because they were motivated by seeing a potential return on their investment, 23% did so because they believed in the idea behind the project, and 17% because they wanted to learn more about the technology behind crypto.

A constant theme in the survey is investors’ feeling that they had failed to conduct sufficient research into the project, with almost 56% saying that they would invest in an ICO again in the future, but would investigate the offering more thoroughly. Close to 33% felt the ICO had intentionally deceived or withheld information from them. A further 17% responded that they “didn't know,” implying they still did not have sufficient information to even assess, in retrospect, whether or not the ICO was misleading or fraudulent. 

These stats perhaps explain the fact that at 54%, the majority of respondents believe ICO operators should be held criminally liable for projects found to have been fraudulent. 

Out of five defined answers to the question, “What’s holding crypto back?” three answers referred to matters of information and oversight; 27.5% cited the lack of awareness about what crypto does and how it works in general; 23.7% pointed to under-regulation; and a further 14.5% cited a lack of transparency in ICO disclosures.

Earlier this year, Cointelegraph ran a piece titled “The Death of the ICO,” pointing to the increased role and impact of U.S. regulators within the token offering space in the years following the industry’s initial 2017 boom.

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South Korea to delay new tax regime on cryptocurrencies until 2022

The postponement follows a successful lobbying campaign by local crypto advocates.

The South Korean government has officially postponed a new tax regime on cryptocurrency gains until 2022.

According to Yonhap on Dec. 1, the planning and finance committee of South Korea’s national assembly passed amendments to the country’s tax laws wherein a new cryptocurrency tax regime will come into effect in January 2022.

On Nov. 25, the legislature suggested delaying the adoption of a cryptocurrency income tax rule to Jan. 1, 2022 instead of October 2021.

The decision will provide local crypto businesses with more time to adapt to new tax laws. The newly passed amendments stipulate that investors in South Korea pay a 20% tax rate on crypto trading gains above 2.5 million won ($2,260) per year. Korean authorities first finalized the tax rate in July 2020.

The postponement of a new crypto tax in South Korea comes in response to the efforts of local cryptocurrency advocates. In October, the Korea Blockchain Association requested the government to delay the implementation of its new tax framework until 2023. The association did not explicitly state it was against the 20% tax rate, but said that local crypto companies need a reasonable period of time to prepare for laws.

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PayPal-Backed Identity Platform Acquired by Nevada’s Blockchains LLC

An identity management provider backed by PayPal, Foxconn and others has been acquired by Nevada-based holding company Blockchains LLC.

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South Korea to delay new tax regime on cryptocurrencies until 2022

The postponement follows a successful lobbying campaign by local crypto advocates.

The South Korean government has officially postponed a new tax regime on cryptocurrency gains until 2022.

According to Yonhap on Dec. 1, the planning and finance committee of South Korea’s national assembly passed amendments to the country’s tax laws wherein a new cryptocurrency tax regime will come into effect in January 2022.

On Nov. 25, the legislature suggested delaying the adoption of a cryptocurrency income tax rule to Jan. 1, 2022 instead of October 2021.

The decision will provide local crypto businesses with more time to adapt to new tax laws. The newly passed amendments stipulate that investors in South Korea pay a 20% tax rate on crypto trading gains above 2.5 million won ($2,260) per year. Korean authorities first finalized the tax rate in July 2020.

The postponement of a new crypto tax in South Korea comes in response to the efforts of local cryptocurrency advocates. In October, the Korea Blockchain Association requested the government to delay the implementation of its new tax framework until 2023. The association did not explicitly state it was against the 20% tax rate, but said that local crypto companies need a reasonable period of time to prepare for laws.

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Crypto Wallet Maker Ledger Hires Luxury Brand Exec to Grow Consumer Business

Ledger's new chief experience officer hails from luxury conglomerate LVMH, which owns brands like Louis Vuitton, Givenchy and Christian Dior.

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This metric suggests Bitcoin price can go as high as $590K this bull run

Net Unrealized Profit/Loss returns to levels that in the past have triggered giant Bitcoin price rises, Glassnode notes.

The current Bitcoin (BTC) bull run could send BTC/USD as high as $590,000, one indicator forecast this week.

Curated by on-chain analytics resource Glassnode, the Net Unrealized Profit/Loss (NUPL) index has reached a level that has historically launched the Bitcoin price an order of magnitude higher.

Unrealized profit chart hits launchpad level

The latest bull signal was noticed and uploaded to social media by the company’s CTO, Rafael Schultze-Kraft, on Nov. 30. At the time, BTC/USD was already making new all-time highs on several exchanges.

NUPL currently resides at 0.62. Previously, reaching this level has begun an uptrend that only reversed once Bitcoin had hit a new price range.

In 2011, the price expanded by a record 3,000% after the NUPL event, while in early 2013 it expanded 800% and another 600% later that year. 2017, the year which delivered Bitcoin’s previous all-time high, meanwhile saw 1,200% gains.

NUPL measures the proportion of coins in the network which are in profit versus those that aren't. Built around a neutral zero value, the closer the index gets away from it, the more the network is in profit. Negative readings likewise signify majority losses.

“NUPL is at 0.62 and predicts tops at 0.8+,” Schulze-Kraft explained alongside an annotated chart.

Bitcoin Net Unrealized Profit/Loss historical annotated chart. Source: Rafael Schultze-Kraft/ Twitter

A 0.8 reading or higher this time around thus opens the door to BTC/USD topping out at anywhere between $133,000 and $590,000.

“Just getting started,” he concluded.

PlanB: The Bitcoin bull market is upon us

Monday’s action meanwhile boosted an already confident analyst who had long said that this year’s performance would be “like clockwork.”

PlanB, the pseudonymous creator of the stock-to-flow-based family of Bitcoin price models, said on Dec. 1 that all was still going to plan after the most recent halving event in May.

“My fellow bitcoiners, the bull market is upon us,” he declared, producing the latest version of his Stock-to-Flow Cross-Asset (S2FX) chart showing BTC/USD posting its highest-ever monthly close.

Stock-to-flow cross-asset (S2FX) historical chart. Source: PlanB/ Twitter

Like Schulze-Kraft, PlanB believes that recent gains mark just the start of Bitcoin’s next phase, a theory which would see Bitcoin simply follow its historical behavior.

“Like clockwork November red dot closed above all other red dots .. at $19,700 .. a new #bitcoin ATH. This is just the beginning. We will see volatility (e.g. -35%), but also new ATH's. Enjoy the ride!” he added.

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