Tuesday, April 26, 2016

Bitcoin market cap explodes


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? 
            Feel free to leave your thoughts in a comment below, and share this post on social media.


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