An elegant Bitcoin (BTC) metric that predicted its run to $12,000 in August has flashed bullish again for the first time since July.

As noted by creator Charles Edwards on Dec. 3, the Hash Ribbons indicator is now signaling for buyers to enter the Bitcoin market.

Uploading an annotated chart to social media, Edwards, who is also the founder of digital asset manager Capriole, noted similarities between Bitcoin now and before the previous bullish upticks throughout this year.

Look what I found. A blue dot, he commented, identifying the new entry point.

Hash ribbons are based on Bitcoins network hash rate behavior and designed to tell investors when price is due to experience upside.

In theory, when miners capitulate due to events such as a major price correction, hash rate declines, only to revive thanks to Bitcoins automated difficulty readjustments. Hash ribbons demonstrate that around midway through this miner capitulation is an optimal time to take positions.

As the saying goes, Price follows hash rate in Bitcoin, hash ribbons lend technical proof to the popular mantra.

Edwards blue dot occurs when the 30-day hash rate value crosses the 60-day value, indicating a recovery is underway.

Hash Ribbon is setting up for a buy signal soon, Rafael Schultze-Kraft, chief technical officer of on-chain analytics resource Glassnode, continued with a further chart.

Schultze-Kraft described hash ribbons as elegant for the indicators reliability. In July, the time of the previous blue dot event, Bitcoin took a matter of weeks to post highs not seen in over a year.

The signal comes as Bitcoin continues to range below $20,000, having seen considerable volatility while getting rejected at just above all-time highs.

Major selling pressure remains, while conversely, successfully overcoming resistance would give Bitcoin a clean sweep to the likely next level of resistance at $22,000, exchange orderbook data shows.

At press time, BTC/USD circled $19,300, having been unable thus far to retake $19,500.

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Bitcoin price metric that called 2020 bull runs flashes buy again - Cointelegraph

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Bitcoin hit another new all-time high Tuesday, touching $19,920 in the morning before slipping to the low $19,000s later in the day. Analysts and investors have been issuing new price targets for the cryptocurrency, often predicting that it will skyrocket to many multiples of the current price.

But the underpinning of those estimates is still hazyBitcoin produces no cash flows and is hardly used for transactions. Its a software that allows people to transact, and is controlled by no single entitythe software operates on computers set up around the world.

Although Bitcoin still sometimes moves as much 5% in an hour, it can be hard to pinpoint exactly why.

Analysts used to claim the price had something to do with the difficulty of mining Bitcointhe cost of the electricity and equipment it takes to complete the equations necessary to create new Bitcoins. Given the assets volatility and unpredictability, however, few still cite this metric.

New metrics are emerging. BTIG analyst Julian Emanuel analyzed Bitcoins price in part by comparing it to the Nasdaq 100 (NDX), which first peaked in the dot-com bubble and then took years to reach that peak again. With that in mind, he thinks its feasible the price goes to $50,000 by the end of next year.

It took NDX 14 years to rise above its parabolic blowoff top, then 6 years to rise a further 150%, he wrote. Bitcoin appears poised to exceed its 2017 parabolic blowoff top in a mere 3 years. Should Bitcoins speed of ascent keep pace with the past three years and the degree of the rally approximate that of NDX, $50,000 per Bitcoin is a reasonable year end 2021 Price Target.

Tyler and Cameron Winklevoss, large Bitcoin holders who founded cryptocurrency exchange and custodian Gemini, recently predicted that the price could go to $500,000 one day on the theory that it eventually replaces gold, which is now worth over $10 trillion.

Others also see the total value of Bitcoin one day rising into the trillions, from its current levels around $350 billion. Michael Saylor, CEO of software firm Microstrategy (MSTR) and a recent Bitcoin bull, said in an interview with Barrons that Bitcoin solves a $250 trillion problem -- thats the total value of fiat currency in the world, which he thinks is being devalued rapidly because governments are printing money.

If Bitcoin ends up becoming the trusted financial mechanism for solving that devaluation problem it could be worth half of that $250 trillion, he contends. If its total value was $125 trillion, each Bitcoin would be worth about $6 million. I think its possible, Saylor said.

Justin dAnethan, a sales manager at digital asset firm Diginex, said he doesnt like to put a price target on Bitcoin, because he believes the price is simply based on public sentiment about the value of having a decentralized, scarce digital asset. Gold is the closest corollary. If we take that approach, the potential for BTC is huge, not only because there is plenty of room to catch up to golds total value, but because it could outgrow it, he wrote in an email to Barrons.

That is why valuing Bitcoin can feel like a circular argument. Its worth more because people think its worth moreand even discussing such big numbers can egg investors on. That, of course, makes it dangerous too. Reversals in sentiment happen fast. And its why many fund managers continue to tell clients that there is a number they also need to consider when looking at Bitcoin: $0. It isnt inconceivable that their investment could be completely wiped out, either because of government action or a catastrophic software issue like a hack (although attempts to hack Bitcoin so far have been unsuccessful). Unlike a real asset, there would be nothing left to sell for scrap.

Write to Avi Salzman at avi.salzman@barrons.com

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Bitcoin Price Targets by Analysts for 2021 and Beyond - Barron's

Those new to crypto, such as the institutional investors recently buying into bitcoins digital gold narrative, might now be looking around for the next big thing.

With the long-anticipated arrival of phase 0 of the Ethereum 2.0 upgrade launching on Dec. 1, that could be the networks native token, ether (ETH). But analysts say ether should be judged on its own merits and not as a bitcoin replacement.

Ive always thought this digital asset space is huge and its not just bitcoin because there are going to be different applications for different things, Raoul Pal, CEO and co-founder of financial media group Real Vision, said in Real Visions documentary Ethereum An Investigation, which was released on Nov. 30. I think of the two [bitcoin and ether] as having a very nice combined asset allocation.

For Pal, an early bitcoin investor, the rationale seems even more plausible these days: As bitcoins price hits a new all-time high, the number one cryptocurrency by market capitalization is now more expensive and thus potentially a riskier bet for new investors.

It can be expected investors are looking for a new opportunity in crypto at affordable prices. Given that ether is trading roughly 59% below its all-time high of $1,432.88, it is tempting to believe theres a bargain to be had. Whats more, the Ethereum 2.0 upgrade to increase the networks scalability, security and energy efficiency has generated a lot of hype.

However, at least for now, analysts and traders who spoke with CoinDesk dont think ether will replace the FOMO over bitcoin.

For institutional investors, they are buying BTC for the digital gold narrative, Ryan Watkins, senior research analyst at Messari, told CoinDesk. ETH just isnt in that conversation yet.

Ether benefits from spillover and likely has more conversation around it from crypto-natives, Vishal Shah, founder of derivatives exchange Alpha5, told CoinDesk. For the uninitiated, [it is] hard to see how bitcoin is not the sole on-ramp.

Weakening correlation between bitcoin and ether

Some analysts say that as more institutions pour money into bitcoin and push up its price, ether and other cryptocurrencies will gradually decouple from bitcoin.

Indeed, while bitcoin this week logged a record high price, ether isnt even close to its all-time high of $1,448.18. Data from CoinDesk shows the 90-day correlation coefficient between the prices of the top two cryptocurrencies, while still strong, has gradually weakened a bit since the summer from as high as 0.93 to nearly 0.7 at the beginning of December.

The thing about correlation is it can disappear at any time, Ashwath Balakrishnan, research analyst at digital asset research firm Delphi Digital, told CoinDesk. In that case, you want to understandthe core fundamentals of what you hold because if you hold ether as a proxy [to your] bitcoin exposure, and [when] prices decouple, you are now exposed to something very different.

Bitcoin has been used by many investors this year as a hedge against a drop in the purchasing power of U.S. dollars. Ether is considered the currency of the world computer, which aims to build an ecosystem of decentralized applications.

The close historical correlation between bitcoin and other cryptocurrencies may be due to how tiny the digital-asset ecosystem is relative to the global economy. The total market capitalization of crypto assets is estimated at $562 billion, a mere 1.7% of the S&P 500 stock indexs combined market cap of $32.2 trillion. With almost every crypto asset built on different fundamentals, non-bitcoin cryptocurrencies may be trending with bitcoin prices simply because the nascent market is still so small and insular.

Correlation data doesnt tell the whole story. Prices may move in tandem but the degree to which that happens is another matter. When the explosive decentralized finance (DeFi) boom hit the market during the summer, ethers price rallied to its highest in more than two years because most DeFi projects are built on the Ethereum blockchain. At the time, bitcoin was struggling to break a similar two-year record.

What Ethereum 2.0 could mean for investors

The market will have to wait and see what kind of real impact the ongoing Ethereum upgrade could have on its native currency because the final phase of the process is scheduled to be completed in 2023. But a major fundamental upgrade on the network underpinning ether could lead its price to move on its own fundamentals, instead of merely following bitcoins price.

The heart of ETH 2.0, which makes the entire system possible, is ether, according to a report by Messari. ETH will not only be Ethereums native store of value asset and fuel for transactions, but will also be Ethereums ultimate source of security from its role in the [proof-of-stake] system.

Thus, while bitcoin can be seen as somewhere between a store of value and a commodity on the asset superclass triangle, ether could ultimately become the first asset to be a combination of all three classes of assets: capital assets, commodities and stores of value.

When ethers price starts to be driven by its own catalysts, holding it as a proxy to having BTC exposure will not work as expected, Balakrishnan added.

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Why Ethereum and Bitcoin Are Very Different Investments - CoinDesk - CoinDesk

Bitcoin (BTC) finally managed to secure a new all-time high, but the digital asset rejected strongly near $20,000. On-chain analysts say a sell-off from whales and miners, combined with the $20,000 level acting as a resistance level caused a fierce drop.

For whales and high-net-worth investors, liquidity is the most important factor. Because they deal with large orders, they need to calculate the slippage their sell orders will cause.

Typically, the best period for whales to sell is when there is peak euphoria in the market met with large buyer demand. This allows whales to more efficiently sell their holdings without causing massive volatility.

When the price of Bitcoin officially surpassed its all-time high on Coinbase, it caused the market sentiment to become highly bullish. Shortly thereafter, whales started to sell, causing large liquidations across major exchanges.

CryptoQuant CEO Ki Young Ju explained that whale withdrawals were slowing down on Nov. 30. He said:

The confluence of whales keeping BTC on exchanges, which means higher selling pressure, and the sell-off from miners amplified BTCs downturn.

Ki also noted that whales began to deposit Bitcoin into exchanges once again, which happens when whales want to sell their holdings.

The price of BTC recovered swiftly after dropping to around $18,200, surging back above $19,400 within hours.

The speedy recovery likely occurred due to the nature of the drop. As the price declined, exchanges saw cascading long liquidations. As such, BTC likely dropped harder than it should have if it werent for the large liquidations.

The recovery was equally intense to the upside for that reason. Late short-sellers could have gotten aggressive as BTC dropped, leading to a short-term short squeeze.

In the near term, Bitcoin could see two major scenarios. First, it could consolidate above $19,000, which would allow the derivatives market to find composure and the open interest to rebuild.

Second, BTC could continue to drop as traders anticipate a blow-off top after achieving an all-time high.

But the macro outlook on Bitcoin still remains highly optimistic. Scott Melker, a cryptocurrency trader, emphasized that the monthly candle for November closed at BTCs all-time high, which paints a positive long-term picture for BTC. He said:

In the near term, the key support levels for Bitcoin are $18,200, $17,700 and $16,200. There are still large whale clusters in these areas, which could cause a reaction from buyers.

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3 reasons why Bitcoin price violently rejected near $20,000 - Cointelegraph

Didi Taihuttu, his wife, and three kids bet all they have on bitcoin.

In 2017, CNBC spoke to the Dutch family of five when they were in the process of liquidating their assets from a profitable business and 2,500-square-foot house, to their shoes and trading it all in for the popular cryptocurrency and a life on the road.

Nearly four years and 40 countries later, Taihuttu and his family still don't have bank accounts, a house, or all that much by way of personal possessions. All of the family's savings remain tied up in highly volatile cryptocurrencies.

"We stepped into bitcoin, because we wanted to change our lives," said the 42-year-old father of three.

When the price of bitcoin collapsed in 2018, Taihuttu added more to his investment portfolio. He says he was always a firm believer that the cryptocurrency was poised for a major rebound. "I think in this bull cycle, we are going to see a minimal peak of $100,000. I won't be surprised if it hits $200,000 by 2022."

I won't be surprised if [bitcoin] hits $200,000 by 2022.

The price of bitcoin reached an all-time high on Monday, as it closed in on $20,000. And some analysts say the cryptocurrency still has a lot of room to run higher.

Mike Novogratz, CEO of investment firm Galaxy Digital, thinks this comeback rally is only just getting started. He sees bitcoin rising to $60,000 by next year.

And Tom Fitzpatrick, global head of CitiFXTechnicals, said the charts signaled that bitcoin could reach $318,000 by December 2021, in a report meant for Citibank's institutional clients and obtained by CNBC.

Taihuttu bought the bulk of his bitcoin holdings when it was was trading at around $900 in early 2017, just months before it reached nearly $20,000 a coin.

Even as bitcoin peaked, the family stayed invested in the cryptocurrency. Once the bubble burst, and the price tumbled down to about $3,000 in early 2018, Taihuttu and his family weren't deterred. "When bitcoin dipped, we started to buy more."

When I asked Taihuttu on our Skype call whether he was worried that we could be in the midst of another bitcoin bubble, he doubled down on his investment. "I don't see demand going down," he added. "I think we're headed for a supply crisis."

Part of what's different about bitcoin's rally in 2020 versus 2017 is that institutional investors are now adopting bitcoin, lending it newfound legitimacy and helping to erase the reputational risk of investing in the cryptocurrency.

"The 2017 rally was largely driven by retail investors, whereas this year we're seeing a massive influx from corporate entities and institutional money managers," said Mati Greenspan, portfolio manager and founder of Quantum Economics.

Old-school, billionaire hedge fund managers Stanley Druckenmiller and Paul Tudor Jones now own bitcoin and big fintech players like Square and PayPal are also adding crypto products.

This kind of mainstream adoption is hugely important, because cryptocurrencies like bitcoin aren't backed by an asset, nor do they have the full faith and backing of the government. They're valuable because people believe they're valuable. So it goes a long way when bitcoin gets buy-in from some of the biggest names on Wall Street.

The surge in interest from mainstream financial players hasn't just reformed bitcoin's image, it's also fomented a supply shortage.

"The basic reason for the two rallies are the same," Greenspan said. "It's a matter of digital scarcity. There is a strictly limited supply of bitcoin available in the market, so when everyone is buying and nobody is selling, it can cause tremendous upward pressure on the price. What's different this time are the players involved."

The 2017 rally was driven by retail speculation, and in 2020, it's the billionaires and corporations that are buying bitcoin en masse.

"When PayPal starts to sell bitcoin to its 350 million users, they also need to buy the bitcoin somewhere," said Taihuttu. "There will be a huge supply crisis, because there won't be enough new bitcoins mined everyday to fulfill the need by huge companies."

And that interest from institutional investors doesn't appear to be slowing down. Six out of 10 investors surveyed by Fidelity in June believe digital assets have a place in investment portfolios.

Mike Bucella, general partner at BlockTower Capital, told CNBC in a recent interview on "Power Lunch" that retail investors are actually the ones missing out on the bitcoin rally this year.

"If you dig a layer deeper in the derivatives market, you notice that most of that derivatives flow has transitioned from the crypto native exchanges of 2017 to institutional products, like the CME," said Bucella. "I think this really firmly indicates that retail actually missed out on this rally this year. It's been primarily and firmly an institutional bid."

But not all retail investors are missing out.

Taihuttu put a couple hundred thousand dollars into cryptocurrency in 2017, while the price of bitcoin was still trading lower, and he has mostly stayed all in on his investment.

Despite 2020's massive returns and all the recent bullish calls around bitcoin price targets, the fact remains, a speculative asset like bitcoin is prone to seismic price moves in a very short space of time.

In 2018, the massive sell-off in cryptocurrencies, including bitcoin, was swift, brutal and worse than the bursting of the dot-com bubble in 2000.

2020 may look different to 2017's rally, but as an asset, bitcoin behaves in a cyclical manner. Each successive high is higher, and the lows are not quite as low, but bitcoin is certainly not immune to another major correction.

Though for Taihuttu, the bitcoin play isn't all about making a profit. He's already given half of his money away to charity, and his family of five has spent the last four years traveling the world, in order to spread the gospel of decentralized digital currencies.

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This family bet everything on bitcoin when it was $900 and bought more when it crashed in 2018 - CNBC

As bitcoin continues to set new price highs, its network is also seeing record-breaking user activity.

As of Tuesday, there were 432,451 active entities wallet clusters controlled by a single participant that sent or received funds in a 24-hour period. Thats an all-time high, according to data provided by blockchain analytics firm Glassnode. The previous peak of 410,972 was registered on Dec. 9, 2017.

The number of active entities has been increasing steadily since the halving and signifies a large increase in network adoption by participants, said Matthew Dibb, co-founder of Stack, a provider of cryptocurrency trackers and index funds.

Bitcoin underwent its third mining reward halving on May 11 of this year. Since then, the number of active entities has increased by 70% and bitcoins price has more than doubled to nearly $20,000.

The cryptocurrency printed a record high of $19,920,53 on Tuesday before falling back. Bitcoin was trading around $19,130 at time of writing, representing a 1.7% gain on the day.

While bitcoins price gains have been relatively sharp over the past eight weeks, the number of active entities has charted relatively steady growth. While the metric has breached highs not seen since 2017, it has done so gradually without bubble-like growth, Dibb told CoinDesk. We take comfort in this when correlating address clusters with forward-looking price action.

Analysts consider increased activity as a bullish sign. When theres greater usage, theres more demand for the cryptocurrency, and that drives the price up, Philip Gradwell, chief economist at blockchain intelligence firm Chainalysis, previouslytold CoinDesk.

The number of active entities rose to multi-month highs in early September, despite the multi-week sideways price action in the range of $10,000 to $12,500, signaling a continued increase in adoption and warning of a price breakout. The rise in activity to record highs suggests bitcoins rally is sustainable.

Our expectation is that this metric will continue to rapidly outpace previous highs as bitcoin breaches through $20,000, Dibb said.

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Bitcoin Sees Record Number of Active Users as Price Almost Hits $20K - CoinDesk - CoinDesk