What's Fueling This Massive Rise In Altcoin Valuations?
Asia Asia Asia!
Earlier today Bitcoin was inching ever closer to $2100 USD. That, after smashing through the $2000 barrier the day before. Seemingly on an endless move higher.
What's even more astonishing is the moves we have seen in the altcoin space.
For those of you new to the space, altcoins are defined as:
"The alternative cryptocurrencies launched after the success of Bitcoin. Generally, they project themselves as better substitutes to Bitcoin. The success of Bitcoin as the first peer-to-peer digital currency paved the way for many to follow. Many altcoins are trying to target any perceived limitations that Bitcoin has and come up with newer versions with competitive advantages. There is a great variety of altcoins." (http://www.investopedia.com/terms/a/altcoin.asp)
The entire crypto space has seen a massive increase in it's total market cap over the past few months as noted here:
It was originally reported that the entire space accounts for over $60 billion in total market cap. Well, as of late yesterday that number officially moved to over $70 billion in total market cap. Money is flowing into the space at an alarming rate.
What's astonishing is that Bitcoin is accounting for less than 50% of it for the first time ever:
Who exactly is driving this move?
That depends which move you are talking about. The rise in Bitcoin or the rise in the altcoin market?
The most recent increase in Bitcoin prices can mostly be attributed to institutional investors in the US, Japan, and South Korea.
If you compare the South Korean dollar volume in this chart with the one at the top from a few days ago you can see a massive increase in KRW dollar volume in just the past couple of days.
There is also an arbitrage opportunity that currently exists between US based Bitcoin exchanges and Japanese and South Korean Bitcoin exchanges.
Bitcoin is currently trading near $2300 on those Asian exchanges while on the US based exchanges it's trading just under the $2100 mark. That represents a 10% premium for those wanting to play the arbitrage game.
The CEO of CryptoCompare, Charles Hayter said that the arbitrage opportunity is a big reason for the recent price surge in Bitcoin saying:
"Arbitrage between the fiat pairs drags markets up or down in line with leading markets. At present, volumes on the KRW and JPY pairs dominate trading with a combined 48 percent market share.”
The increase in altcoin prices is likely coming from a different kind of investor all together.
The legalization of digital currency and the elimination of consumption taxes on virtual coin transactions in Japan have convinced beginner and casual investors that ALL cyrptocurrencies are created equal. Bitcoin's success has created a false sense of confidence among less sophisticated investors.
According to Japan-based researcher and IndieSquare co-founder Koji Higashi, most investors are investing in cryptocurrencies apart from Bitcoin with relatively shallow knowledge and understanding of digital currencies. He went on to further say:
“I think I know the answer now. Newly entering Japanese investors are driving this great altcoin bubble and not-so-smart money is flowing into the space especially into some altcoins at a rather concerning rate. Another thing to note about this new trend is that the general lack of understanding or appreciation of the technology by many of new users.”
So, we have institutional money flowing into Bitcoin and we have new, first time, mom and pop' investor money flowing into the altcoin world. There is a good chance at least one of these are in a bubble, which one would you put your money on?
There are several other factors fueling the demand for altcoins, including the large number of new exchanges being created in Japan and South Korea. The most popular altcoins are being added to those exchanges almost daily.
There are also rumors that Russia may go the same route as Japan and other parts of Asia in the next year or so. Can you image the kinds of prices we could see if that happens as well as if many other countries join the party?
Enjoy the ride my friends!
Sources:
http://www.investopedia.com/terms/a/altcoin.asp
https://cointelegraph.com/news/japanese-investors-might-be-fueling-the-next-altcoin-bubble
https://cointelegraph.com/news/bitcoin-price-hits-2087-trading-in-japan-south-korea-for-2350
Image Sources:
https://cointelegraph.com/news/bitcoin-price-hits-2087-trading-in-japan-south-korea-for-2350
Follow me: @jrcornel
There is no bubble at just 72 billion market cap.
Heck, we haven't even begun to chew the gum yet.
Haha I like that! We have only just now opened the wrapper ;)
All the gift wrap is scattered... and those martini glasses aren't empty ... yet.
I've seen projections that say upper possibilities could be 1 trillion by 2023 that's alot of cheddar. Like Planet Cheddar
That seems possible, and hopefully true :)
very possible.
1% of m2 money supply in btc, man that would be astronomical
Well if we talk about mass adoption this marketcap is nothing at all!
Yep, the entire crypto market cap is not even 1/10th of the market cap of Apple alone.
yeap. I would call it a bubble when my neighboors start talking about icos. that's when you pull out a bit.
EXACTLY! Compare 72 billion with the world economy.
True, however it is still very, very early. Less than 10 years since 2009!
The Blockchain is big change and I highly doubt if it will go away anytime soon.
Agreed!
Presumably the decentralized aspect of cryptos is far more important than most people fully comprehend. The central banks hate competition because they can't compete with Blockchains by using martial law and/or terrorism.
Long story short: the dollar is slowly sinking but I've heard some say that it will take about 5, 10, 20 years. Don't know for certain. We are all on our own...
I don't think the alt-currency movement is gonna go down much at all. Dollars and gubmint centralized currencies are losing value while these decentralized blockchains look to be a way to hold value.
Calling this a bubble ignores the accumulating evidence of the blockchain's success.
I think I might just be holding for a while based on this knowledge. Great piece mate!
You got it. It seems like we could go a lot higher still. I am sure there will be some big dips along the way though.
Agreeing with the both of you. It will be quite a ride.
I believe this will continue for a good while, and I'm a skeptic about most things (name :P). This is different than most "bubbles". This is an emerging market. I think this is just one of many "waves" of new money coming in which will lead to a multi trillion dollar industry. I'm not saying there will be no retraces, but on the whole it will keep going up without much of a break. This will be a strong call to big money to wake up and do some research on this exciting field!
I agree. You look new here. Welcome to Steemit!
Thank yi!
Congratulations @jrcornel!
Your post was mentioned in my hit parade in the following category:
Methinks F.O.M.O. to be honest.
Definitely a lot of that going around right now.
Excellent stuff.
I wonder how much the scaling debate is hurting Bitcoin? I moved Steem today so fast it seemed like it was instant. Last Bitcoin I moved waited half the day to find a block....
I know what you mean. Bitcoin usually takes me at least 40 minutes any time I move it.
If you ask me, i notice a lot of information coming in to the market the last months. What i mean is that newspapers in Holland, websites, daily news, radio are talking more and more about Bitcoins. Besides that the are also nameing altcoins in these newsflashes. People arround more are getting interested in cryprocurrencies more and more, even the ones sceptical in the beginning. Based on that i would say; we are still at the beginning, but a Buzz is created at the moment, not only early adapters are interested anymore.
Well i think its the investors who have missed. I myself came to know about cryptos a year back. i feel cryptos are sky rocketing because of more and more new investors, rest of the factors matter alot less.. Iv been sharing info to many about them, but most of them still ignore, infact iv spoken to people with degrees in economics and MBA in finance, they still feel its not going to work, lol. so i guess there will be alot more buying once almost every will come to know, however its gona take sometime, but i guess by then cryptos will become far more expensive. So as per me, its the new comers/investers that that are driving this rally..
The world is starting to wake up to the fact that the the bankers have been lying to us and they and their money can no longer be trusted. Great Post
This really seems like an exciting future for us all!
Hope so!