OPTICAL ILLUSION: Crypto Markets Still REMARKABLY TINY!
Growth in size, diversity and in technological supremacy of an asset class that relies on computing power is much more life-changing, when going from obscure to known than when going from known to household.
Think of the upside potential, percentage-wise, of a small-cap stock compared to a bloated, expensive stock like Amazon or Google. For that matter, think about how small Amazon and Google were in the beginning, and how much bigger they are today.
When you start small, you can expand quickly, and that’s how big fortunes are made.
For example, When Domino’s Pizza went from one branch to ten, the company grew 10-fold, but when it added an additional 20 branches, it represented only a 3-fold growth.
Bitcoin has dominated headlines so overwhelmingly in 2017 that people thought it rivals the U.S. dollars in size, but nothing could be further from the truth.
The same goes for the amount of users and the daily transactions volume. By looking at these metrics, I knew BTC was getting out of hand at $10,000 and published a TAKE PROFITS alert.
Cryptocurrency is a perfect example of an asset, which investors had no idea of its size and reach. Because of its climb from pennies to $20,000 made everybody view it as a massive asset class, most fail to realize how relatively marginal it still is.
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However, when we look at the data, we can see that crypto isn’t nearly as big as most people think it is. If you took the value of all the cryptocurrency tokens in existence today – in other words, crypto’s aggregate market cap – you’d have $125 billion worth of crypto. If that sounds like a lot, we can make some comparisons to prove otherwise.
Bitcoin is, by far, the largest class of crypto in terms of market cap as well as name recognition – not to mention, it’s been around the longest. One individual, Bill Gates, could buy all of the world’s Bitcoin all by himself and have billions of dollars to spare. The same goes for Jeff Bezos and Warren Buffett.
Speaking of Jeff Bezos, whose net worth is around $130 billion, he’s worth more than the entire cryptocurrency market. Walmart’s market cap is $283 billion, and Microsoft’s market cap is $811 billion; these are all, by far, bigger than crypto’s market cap.
When we fully appreciate just how tiny the cryptocurrency world is today, and how much room for expansion there is, then any price fluctuations shouldn’t be a major concern to longer-term investors.
As I said, it’s not just tiny in terms of market cap – the number of crypto users is also extremely small.
I want it to sink-in that approximately 35 million people out of a world population of over 7 billion are currently using cryptocurrency – literally 0.5% of the population. Just imagine what would happen to the price of Bitcoin and other cryptocurrencies if one or five or ten percent of the world started using Bitcoin. There would be a price explosion of epic proportions!
It shouldn’t be very long before we get there, as the number of Bitcoin transactions is consistently trending upwards, irrespective of the short-term price action.
This alone should be a major driver of growth in Bitcoin and other cryptocurrencies, but there are other catalysts on the horizon as well. When the Intercontinental Exchange, the owner of the New York Stock Exchange, launches their Bitcoin futures exchange, Bakkt, institutions will pour large amounts of capital into the cryptocurrency market.
Bakkt has recently raised $182.5 million and has huge partners like Microsoft, Starbucks, and Boston Consulting Group, so the launch is going to be a true watershed moment for crypto. Plus, let’s not forget about the inevitable advent of a Bitcoin ETF: VanEck/SolidX has a promising Bitcoin ETF that’s awaiting approval from the SEC, with a decision expected by February 27.
Yet another catalyst on the horizon is the expected launch of a crypto trading exchange in Germany within the first half of 2019. This will be hosted by the Stuttgart stock exchange, which is among the ten biggest exchanges in all of Europe.
As things stand at the moment, for investors with no exposure to Bitcoin, this is a great time to start building a position, as we see it.
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.Please read our full disclaimer at PureBlockchainWealth.com/