Are Cryptocurrency Markets Moribund?

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Cryptocurrency

In December 2017, the price of cryptocurrency hit an all-time high. Bitcoin led the way as it briefly breached the $20,000 per unit barrier before speculators cashed out and became overnight millionaires. At the time, the cryptocurrency market capitalization was inching towards $1 trillion. Since then, markets have cooled spectacularly. Bitcoin is now trading around $6,700 per unit, with a circulating supply of 16.967 million BTC. The top 5 cryptocurrencies and their market capitalizations now comprise the following (approximate values mid-April 2018):

  • Bitcoin – market capitalization of $114.4 billion
  • Ethereum – market capitalization of $39.140 billion
  • Ripple – market capitalization of $18.957 billion
  • Bitcoin Cash – market capitalization of $10.875 billion
  • Litecoin – market capitalization of $6.438 billion

Closer inspection of the cryptocurrency market reveals an interesting reality: The top 5 cryptocurrencies comprise 74% of the entire cryptocurrency market, at a value of $189.89 billion. This is a amazing statistic given that there are some 1,562 cryptocurrencies operating across 10,164 markets. Bitcoin makes up 44.4% of the total market cap, which is also an upward correction for the world’s premier cryptocurrency. With prices as depressed as they are right now, it’s easy to lose track of the 1-year performance of the top 5 cryptocurrencies:

  • Bitcoin was trading at $1,191.78 per unit in April 2017 and is now $6,746 per unit
  • Ethereum was trading at $43.30 per unit in April 2017 and is now $396.50 per unit
  • Ripple was trading at $0.03348 per unit in April 2017 and is now $0.48490 per unit
  • Bitcoin Cash did not exist in April 2017, but opened at $555.89 on July 23, 2017, and is now $637 per unit
  • Litecoin was trading at $8.84 in April 2017 and is now $120 per unit

It’s easy to lose track of the stellar gains made by cryptocurrency over the past year, but these comparative statics put everything into perspective. All 5 of the ranking digital currencies have displayed strong growth trends, particularly Ethereum, Ripple, Litecoin, and Bitcoin. Only Bitcoin Cash has shown limited growth potential in that time.

*Note: Volatility can cause dramatic price fluctuations. These prices were only accurate at the time of writing.

What is Really Going on in the Cryptocurrency World?

Wilkins Finance trading specialist, Montgomery Sewell Jr, explains that a cryptocurrency definition must extol the virtues of the blockchain technology as well as the potential pitfalls. According to Sewell,

‘…Cryptocurrencies can be used as mediums of exchange, much like money, or they can be invested and traded on cryptocurrency exchanges. Cryptocurrency exchanges are platforms where digital assets are traded for other digital assets (cryptocurrency), or fiduciary currency. The cryptocurrency markets are like securities, but they are not traded on the world’s bourses. It’s important to follow the latest cryptocurrency news to understand what drives these digital assets.

Regulation is a big factor in the cryptocurrency markets – any talk of increased regulation tends to have a dampening effect on Bitcoin and altcoin, while strong drivers of cryptocurrency include its adoption in the financial and e-commerce world, and from leading industry aficionados like Mark Cuban. It is important to point out that there is extreme volatility in cryptocurrency markets. Prices can rise or fall sharply within an hour – and only traders with access to disposable income should dabble in this wild market.