It took the nascent cryptocurrency market slightly over 12 years to reach a market capitalization of more than $1 trillion.
The cryptocurrency market is sitting comfortably with a market cap of $1.0 Trillion. The road to this milestone achievement was on the horizon for some time. The market cap reached a high of $827 billion in January 2018. However, a bear market kicked that ensued saw a significant drop in the market cap.
Bitcoin carries the market
Bitcoin, the ‘king of cryptocurrencies,’ is carrying the industry as the leading digital asset accounts for more than 70% of the market’s share.
Perhaps it does not come as a surprise given that the cryptocurrency is slowly appealing to traditional institutional investors. Major financial companies, hedge funds, and asset managers are buying bitcoins worth millions, with a few exceptions spending billion to acquire the asset.
This naturally pumps the price of bitcoin, which in recent weeks, has been on a tear, smashing records after records.
Bitcoin’s price has nearly doubled in less than 2 months. Scarcity, institutional capital, and speculative demand are some of the leading factors in driving bitcoin prices.
Bitcoin underwent a halving event in May 2020 where miner block rewards were slashed in half. The event is traditionally followed by a bull run in the months after.
This time was not any different. But there were many factors at play including the coronavirus pandemic, its effects on the economy, quantitative easing, and investors in search of an ‘alternative safe-haven’ asset.
Bitcoin has lifted other digital assets such as Ethereum and Litecoin along the way. The booming decentralized finance (DeFi) sector has given the market a big boost.
Perhaps XRP might be missing from the party as its parent company Ripple is locked in a legal battle with the U.S. Securities and Exchange Commission (SEC).
Targeting gold’s market cap
Bitcoin is generally referred to as the digital gold and a new safe-haven asset. However, the cryptocurrency market as a whole is still far away from being as big as the gold market. Gold has been traded for many centuries while the crypto industry is only 12 years old.
Gold proponent and long-time bitcoin critic Peter Schiff reinforced his belief that gold is a better store of value than bitcoin, whose “value comes from the belief that it can be resold at a higher price in the future to speculators willing to make the same bet.”
And if ever there is a good excuse for one to use the exclamation ‘to the moon,’ this could one of those moments.