Drop in Crypto This Week Equivalent to the Entire Market Cap Six Weeks Ago
A volatile day in the crypto markets, but worth remembering that the market is still approximately double its value in late 2017, sitting now at US$532BN
In the jaws of a volatile market, it’s worth exploring the rapid expansion of crypto over the past 12 months and the increasing number of crypto assets available. On December 1st, 2017, the net market cap of all cryptos was US$300BN. While the large slump in the market seems dramatic, it is worth keeping in a broader perspective.
While Bitcoin’s price skyrocketed in the past year, its dominance in the cryptocurrency market dropped to 32% before returning upwards to 39%. For comparison, in July 2017, the market dominance of Bitcoin was beyond 50%. Ethereum, Ripple, Litecoin and other alt coins are claiming an ever greater stake in the market with dominant exchanges consistently adding new crypto assets to their trading pools. While today’s events have seen a lot of losers, some have lost far worse than others.
Cryptonomos has itself recently expanded our token buying platform from Bitcoin and Ethereum to allow token trading for Bitcoin Cash, Litecoin, Dash, and Z Cash.
Diversity Offers Opportunity
On the 19th of December 2017, Coinbase launched trading in Bitcoin Cash which caused considerable market volatility. 2017 saw hundreds of new cryptocurrency exchanges open their doors to thousands of new crypto assets. The market impact of additional crypto assets is difficult to quantify, but seemingly increasing the supply of different coins has deflated Bitcoin prices and affected its market dominance. Following the launch of Bitcoin Cash on CoinBase, Bitcoin dropped ~14% in a day, dropping below US$17,000USD while Bitcoin cash cleared the US$3,000 mark.
After today’s market slump, Bitcoin sits at ~US$11,400, while Bitcoin Cash is at ~US$1,870. Beyond the spot price, Willy Woo, a highly regarded crypto analyst, believes that bitcoin’s eventual decline in dominance is healthy because it “describes the long journey of crypto assets maturing as more of the world is tokenized.”
New cryptocurrencies will increase ICO participation
According to a report for VC Mangrove Capital, the average return was 1,320% across 204 initial coin offerings with “known outcomes” (crypto assets that are currently trading or are known to have failed). “If one had blindly invested 10,000 euros in every ICO, including the significant number of ICOs that failed, this would have delivered a +13.2 x return.” said a Mangrove Capital Partner.
“We have seen managers invest in the actual currencies and/or in the ICOs, and soon there will be derivatives as well,” noted Steve Nadel, partner at Seward & Kissel and hedge fund attorney. “Cryptocurrencies have garnered a fair amount of interest in the investment management space, primarily because of the returns…” Traditional hedge funds, investment banks, and institutional investors have started to take notice of the crypto space.
While today’s volatility will have spooked some crypto holders and potential buyers, the opportunities presented by a tokenized world remain bright. One need only look at how far crypto has come in a mere six weeks to be reminded of the exciting long term opportunities.
