Yet again, something epic has
occurred in the cryptocurrency markets.
Bitcoin has seen its market cap
soar to record highs as of late, reaching as high as 7.22 Billion USD. This represents a move upwards from $6.9B
just two days ago. This means that over $250 million has flowed into Bitcoin
in a forty-eight hour period.
The more one zooms out in the
timeline, the more impressive the figures become. For example, looking two weeks back, market
cap was sitting in the ballpark of 6.7B USD.
So the recent $250 Million rise comes on top of a $200 million rise over
the previous several weeks. That totals
$450 million in new capital in a very small timeframe.
That $450 million
becomes part of an even larger context upon zooming out farther. Back in September 2015, market cap was
only a fraction of its size today - around $3 Billion.
All in all,
we have seen well over four billion
dollars worth of new capital, seemingly from out of nowhere, surge into
this digital commodity. This brand new
form of virtual gold, first of its kind, backed by revolutionary block chain
technology changing the world in almost too many ways to conceive. It’s not difficult to understand the appeal
of a decentralized, peer-to-peer ledger system using a finite commodity over a
centralized control system using infinite pieces of paper. The far more interesting question becomes
this: why now?
In the
past, external events have borne a rather obvious correlation to rises in
Bitcoin. The Greek banking crisis of
April 2013 for example saw new nominal record highs for the digital currency at
the time. Other financial and
geopolitical events around the world have had similar effects.
This time may
have to do with China, as Zerohedge speculated may happen as far back as
September 2015. They noted that 2.2 Trillion in Chinese deposits may be seeking to escape capital controls at some point in the near future. If anything even close
to that does describe what’s going on, this will prove to be the early
beginning stages of a massive bull market in cryptocurrency. This bull run will play out over several
years, and will surpass the rise of Internet stocks and related technologies of
the late 90s.
How do I
know this? Simple – if the current rate
of market cap increase were to continue, it’s not difficult to project the price
trajectory. Parabolic won’t even be the
correct word – more like volcanic eruption of epic proportions.
And none of
this analysis takes into account the all-important factor of “halving” – the
time when, every four years, bitcoin miners get rewarded with 50% fewer coins
for solving a block (See Coindesk.com and other bitcoin forums for more
information on halving and mining). The
last halving saw bitcoin jump from single digits to quadruple digits in short order. What will the next halving bring, set for
July 2016?
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