Bitcoin and Ethereum Pushes Digital Currencies to $38 Billion Market Cap
The total market cap of all digital currencies has increased by almost $10 billion in just one week, rising from around $29 billion on April 22nd 2017 to now stand at $37.8 billion, an all-time high.
The market cap has more than doubled since March 2017 when it was at around $15 billion, with bitcoin the main driver, rising from around $6 billion last year to now stand at $22 billion.
Considering the many difficulties bitcoin is currently facing, with Bitfinex unable to process fiat deposits and withdrawals while China can’t process bitcoin deposits and withdrawals, on top of general lack of news, a perceived stagnation in innovation and a continued in-fighting which some say has created a “toxic” environment, many are wondering why does the currency keep rising?
Global monetary mismanagement last year gave it considerable fuel, increasing its utility and thus demand, with the prospective ETF maintaining momentum. But, since the SEC rejected the ETF and China plus India got a handle on their fiat, combined with liquidity shortages, you’d think price would fall as utility appears to have reduced.
That might not be happening because of artificial demand from Bitfinex which some may be arbitraging, leading to bitcoin’s market giving conflicting signals. On the one hand, price has gone up, on the other, bitcoin’s market share has fallen below 60%, dropping around 1% overnight again, now stating at an all-time low of around 59%.
The Ethereum Spring
The main reason for this drop is probably because of ethereum. The currency has gone from $1 billion to more than $7 billion in just two months. Its trading subreddit had more users online yesterday than both of bitcoin’s main subreddits combined. Eth’s based tokens keep going up and up, with two of them making it to the top ten while the ICO sales are undoubtedly making some rich.
The currency is enjoying a booming spring, with a happy fun community that dares to dream of the mainstream. It’s not ready. It needs PoS, it needs sharding, but it seems no one is willing to wait for all that, diving in what may be another sink or swim.
Bitcoin’s sink or swim moment was in 2014 when the currency was accepted by a number of household brands. It was the right time to wet the toes and test the water, but the scalability “debate” brought out the sharks. They injured the eight-year-old bitcoin considerably. Some say fatally as far as conceptually.
Eth has the benefit of that experience, with the clear lesson being move very fast. Sure, things might be broken in the process, but they’ve all been warned of it. The currency can’t slow down to take into account potential mishaps which may affect the price because it needs to cross the sharding line.
Still, the platform is probably ready for simple applications comparable to windows’ 95 paint. A necessary first step to fancier photoshops that it might be able to handle after PoS and sharding.
Everything is Up
The other currencies in the top ten are far less interesting, but moving. Ripple has decided to make an appearance again, rising to a $2 billion market cap, to the probable annoyance of many in this space not least because it doesn’t have a blockchain.
Its founder said he was to sell at market price billions of them, while the centralized company that issued all the ripples holds some 66% of the currency. As such, few see it as interesting conceptually, but unlike the other currencies it is different from bitcoin and eth, therefore perhaps gaining the third position.
Copycat litecoin has been sort of sidewaying for some time after segwit lock in, giving its holders little to talk about now. On the other hand, eth’s copycat, ETC, has gone up and up. Why? Who knows, maybe just the name ethereum is worth almost a billion.
As far as utility, etc doesn’t really offer any because it does everything eth does, but plans to do it worse in the future. That’s because eth is to move to Proof of Stake which may allow the currency to bring down confirmation times to two seconds, from the current 17 seconds.
Smart contract based dapps need it. Users aren’t going to wait 17 seconds each turn. ETC however has diffused the time bomb which is meant to effectively give miners no choice in the matter. As such, they may remain on proof of work and its slow confirmation times as well as high inflation.
That’s not to even mention the more practical considerations for any project. Why even consider etc with barely any users when you can have eth’s vibrant community which attracts some 1,000 online active users in just one subreddit. To further illustrate the point, the one ETC ICO, which was intended to fund a bitcoin unlimited mining pool, failed due to lack of interest.
And… a Token
Finally, Golem, an ethereum based token for a project that is to launch a worldwide supercomputer has made it to the top ten. A supercomputer you say? Yeah, literally, that’s what they claim. Will it really work? Who knows, it would be interesting if it does, and if they need some advice it would be far more interesting if they changed their name to something less erm, Lord of the Ringy. I mean, who wants their brand associated with that character? Someone whose failed their marketing degree I suppose.
That’s it for this entry. Obviously none of the above, or really anything I write, is meant to be advice, just opinions, much of it speculative. This space though is booming. Everything is up, although some far more than others. A transition might be underway too, the so called flippening. Traders might focus on their market cap comparison, but as far as attention and focus is concerned, the flippening might have already happened.
Just a final word. Ancient wisdom found in deep caves says diversify. You never know what might happen. The usual rule is 10/something – I never got around to finishing the Intelligent Investor – but I think the general idea is some very low risk, some medium risk and the smaller portion at high risk.
Andrew Quentson on 01/05/2017