Bitcoin Market Cap Nears $30 Billion

By May 9, 2017 Bitcoin Business
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Bitcoin’s market cap has increased 5x in just one year, from around $6 billion during summer 2016 to now $30 billion, following its price rise from around $450 to now trade at around $1,760 on Coinbase.

Bitcoin’s price rises by $500 in two weeks.

The latest rise began on April 25th, exactly two weeks ago, increasing from $1,257 to $1,765. What caused this sudden $500 appreciation is not very clear, but its price increase appears to be inversely correlated with a price decrease of other digital currencies.

Almost all of them are down today, while bitcoin is up, suggesting traders and investors who have seen some amazing gains and all-time highs in other digital currencies might be diversifying some of their profits to bitcoin.

The market cap of all digital currencies has seemingly not increased since yesterday, even though bitcoin’s market cap has. Suggesting its price increase might be merely reshuffling. On the other hand, when other digital currencies increase, the market cap also increases.

That might mean new investors are entering the space through other digital currencies and then find out about bitcoin and diversify, a potential reversal of the usual entry point being bitcoin.

That might be because, with the exception of ethereum, it is very difficult to fiat buy other digital currencies. Outside investors therefore, interested in say ripple, will have to buy bitcoin first. Thus if they want to sell ripple because they think it is too high, they would probably be buying bitcoin at the same time.

So the boom in other digital currencies appears to be lifting up bitcoin too, a currency which, although increasing in value, has done so at a far slower rate than others, such as ethereum or litecoin.

That’s because bitcoin has run out of capacity. It cannot welcome new users without a corresponding increase in fees which leads to other users being priced out and thus start using other digital currencies.

Solutions have been proposed years ago, but none have been adopted so far, continuing a loss of network effects as bitcoin’s market share was nearing less than 50% yesterday, slightly recovering today due to the reshuffling.

Nonetheless, overall, everything is up. The combined market cap is now $52 billion. Many digital currencies have made some stupendous gains, up 10x, 20x, often in weeks, or in the case of ripple yesterday in just one day.

Interest in this space is clearly significantly growing, with ethereum leading as far as new projects and news is concerned due to its smart contracts capabilities, its many ICOs and its testing or experimentation by many household brands.

Bitcoin too is growing, perhaps due to finding a space as a stop-gap and an entry way for other digital currencies, but it’s not clear for how long that will continue considering 40,000 transactions are currently stuck in a backlog, waiting to move.

Featured image from Shutterstock.

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