The price of Bitcoin is making all-time highs again and several other cryptocurrencies (also referred to as altcoins) have seen rapid price increases this year. Is 2017 the year of the cryptocurrency bubble?! Let’s look at a few charts to set the stage.
Total Cryptocurrency Market Cap
As of this writing, the total market cap for all cryptocurrency is now over $30 Billion! To put this into perspective, it was $7.1 Billion at the start of 2016 and stood at $18.3 Billion when 2017 kicked off. The total value of cryptocurrency more than doubled in 2016 and has grown by over 60% in just the first 4 months of 2017.
Let’s look at some factors driving the valuation growth in cryptocurrencies:
Bitcoin is still King
Bitcoin has continued to gain in popularity and still holds the title of “King of the Crypto World”. Its market cap is now over $20 Billion and has been making steady gains over the past year. While bitcoin has contributed quite a bit to the total market valuation, it is slowly losing its share of the pie. The reason… Altcoins!!!
Altcoin Market Cap
2017 has been a stellar year for altcoins! By far the leading contender to bitcoin’s market cap is Ethereum, but several other altcoins are closing in the Billion Dollar Club. Keep an eye on Litecoin, Ripple & DASH.
The altcoin market as a whole has seen valuations rise at a much fast pace than that of bitcoin’s and is showing no signs of stopping. The chart below shows the meteoric rise in 2017 putting bringing the total altcoin market cap to over $10 Billion now. Keep in mind, $7 Billion of this came in the span of two months!!!
Why all the Hot Money?
Some argue that funds are flowing out of Bitcoin and into the others. While there has been some of that, the total market is seeing a net increase due to the broader acceptance of blockchain technology by leading banks, tech firms and governments. This is driving further investment into cryptocurrencies and blockchain startups. As new use cases are developed, new varieties of coins continue to be created to solve various problems and to improve on what Bitcoin pioneered. While this technology is still in its infancy, some protocols are starting to mature and bigger companies are starting to get behind several of these projects.
The number of crypto exchanges also continues to grow, making it easier for more people to get into the space. As prices increase, excitement builds which brings more money in creating a cycle that feeds on itself. While using Bitcoin or others for daily purchases is very difficult, several companies are providing solutions to further increase retailer adoption. However, we’re a long way from being mainstream. Ask you relatives or friends if they own any Bitcoins. Better yet, ask them if they can name any of the altcoins!
Bubble About to Pop?
So are bitcoin and the other cryptocurrencies in a giant bubble that’s about to pop? We don’t believe so. However, there is certainly some froth building up and the excitement is beginning to get ahead of itself so a correction here would not be surprising? However, any correction will be temporary and if bitcoin’s history serves as a guide, we should expect continued volatility as the bull run proceeds.
“We believe that cryptos are a long way from being mainstream and until your Uber driver starts recommending the latest ICO, you can bet this party has a few more rounds left.”
The key is to know which coins to buy and when. There are literally hundreds of different altcoins and there is no doubt that the vast majority of them should not be considered for investment. Many are subject to pump and dump schemes and often are just copies of other coins with no real development teams behind them. However, some of the top 20 have some compelling business cases and may prove to be big winners but you have to know when to get in and when to get out. If you want to learn which coins are setting up for another big move or how to get started, it’s time to join the Node Investor community. We’ll help you stay up to day with the latest breakouts and opportunities.
