Cryptocurrency Market Poised for 2018 Movement Higher
Hello viewers and readers!
With Bitcoin hovering just above $5,600, the late 2017 and 2018 cryptocurrency market is looking solid. Some may think why should cryptocurrency continue to go higher in 2018 when it has already rallied so much in 2017?
This is a fallacy in thinking. If we draw a parallel to the world of stocks, it would be like saying Google cannot be a 600 billion dollar company because it had already gone up to 300 billion. This sort of thinking arises due to a lack of knowledge on how to apply valuations to assets.
Prices are not determined by how much something goes up or down, but in the long-term, they are determined by supply and demand. Supply and demand is a system of many factors, but really how much something has gone up or down, really only affects trading behavior, not so much use-cases or long-term investor interest in a market.
Traders may sell when crypto has gone up 100%. Yet, if traders see a decline from that high, they may become bullish again and rebuy the asset. Long-term speculators buying because of the future potential of cryptocurrency is massive, are not going to be dissuaded by the market having gone up 100%. Investors look at a different metric, and this metric is market capitalization.
Market Capitalization Explained
Outstanding Coins/Tokens x Price per Coin/Token = Market capitalization
The above formula outlines the basic math of market capitalization. It is an important metric to understand because with it, we can price cryptocurrency assets relative to other world markets such as real estate, gold, national currencies, and stocks.
US Real Estate: $29.6 trillion (2016)
Gold: $7.5 trillion
US Dollar (M2 Supply): $13 trillion
World Stocks: $69 trillion (2016)
This gives us a gauge by which to look at cryptocurrency as a whole. Cryptocurrency is most similar to national currencies or stocks. In fact, the technology of cryptocurrency can be used in the follow ways:
- Pure Digital Currency
- System Use Token Currency
- Revenue Sharing Token (Dividend)
- Loan Security (Bond paying interest)
- Traditional Stocks Tokenized
- Decentralized Autonomous Organization Shares (New type of Stocks)
- Tokenized Commodities (Tether, Digix Gold Token, ect.)
- Decentralized Derivatives (SBD)
... the list goes on.
Digital decentralized currencies alone in the future could measure in the trillions for market capitalization.
Decentralized stock exchanges, whether they are trading traditional stocks tokenized, or trading DAO shares, could likewise measure in the trillions for market capitalization. This is not to mention the other asset classes which have been invented.
No Barriers to Entry equals Larger Market Potential
The main advantage of these systems is that there is no barriers to participation. Many ICO's will state they are only for residents of specific nations; however, this assertion by their website agreement is never fully enforceable since blockchains such as Ethereum allow anyone with internet access to participate.
All of this freedom for anyone to participate results in a broader market potential than traditional currency or equity markets. A broader market means higher market capitalization.
All of the long-term metrics of how we should size the market of cryptocurrency point toward a higher 2018 cryptocurrency market, which will involve higher prices for bitcoin, ethereum and many other cryptos.
Ted, I came across this article the other day and thought I'd share. I appreciate the insights the author provides, notably:
Source:
https://blog.chain.com/a-letter-to-jamie-dimon-de89d417cb80
"they are 10x better" -- Not really. For example, if you want to raise capital but you don't want to spend a million on lawyer fees in the US, move your operation to the Caimen islands, do an ICO, and you can raise 100+ mil today. 5 years from now, you could possibly raise a billion. Worldwide capital investment is not something traditional systems can achieve, and traditional systems exclude 99% of humanity.
Then I would also say, the decentralized trust mechanism is important because this elevated level of trust above and beyond traditional systems creates trust outside of 17th century style governments. And this manner of trust is more convenient in many ways than the old world method. For example, to achieve an end, you may have to resolve it in court which can be expensive... but a blockchain contract solves these issues without cost due to a formulaic outcome of the software on the distributed system. To the degree a decentralized contract works, it changes everything in those areas it will work. The primary interesting way this works is perhaps decentralized organizations / corporations.
I agree with the author to a limited extent. For now, it's safer and cheaper to use US dollars in the US. Yet there are already plenty of situations worldwide where it's safer and cheaper to use digital currency. This same concept applies to every area blockchain can penetrate. When it moves into an area, it will compete and beat many traditional systems around the world. It may not beat every system in every case, but it will beat many of them.
I agree about the junk ICO's out there. Most of them are useless, and just a way to get people to part with money.
The author provides a good framework to be critical of crypto assets. I agree with many of the author's points. You also make good counter-points.
Do you think ICOs continue to be the boom that we've been seeing? If and when a platform like EOS takes off, it's not clear to me what sort of function an ICO will really have. I guess there's just so much froth in the ICO market that 98% of what I'm looking at doesn't seem like viable tokens (EOS being one of the only exceptions).
ICO market needs to launch real projects, not junk scam. To the degree it just keeps hammering the scam projects, is the degree ICO's will be unpopular for a time. The main issue is that for some reason when they hit exchanges, people bid them up so there is almost no downside to ICO flipping lately. I would certainly not own most ICO's long-term. .... This all said, the method of operation for an ICO is revolutionary and when people figure out how to launch legit projects, and have systems for weeding out the scams (3rd party rating agencies), ICO's will be the best method to raise global capital.
100%
Just leveling with Gold's market cap alone crypto could easily increase 50X. If you add remittances, DApps, Micropayments and even industries that haven't been born yet you'll realize crypto currencies are way undervalued. Bitcoin's lightening network is looking really promising!
https://steemit.com/bitcoin/@cryptoeagle/crypto-is-siphoning-off-gold-s-market-cap-bitcoin-could-increase-50x-in-price-by-stealing-gold-s-thunder
If that is all true, why are you so bearish on Bitcoin? :)
By the way, Peter Schiff does NOT approve of this message.
Bearish on Bitcoin? Haha! I'm super bullish on it.
Peter Schiff? You mean the horse buggy man? ;)
Super bullish? Why do you hide it so much? Damn, if you like the token, stop being a debbie downer about it. LOL
Horse and buggy man? Oh boy...you are going to send the gold bugs into a frenzy....Peter is their crusader...out there touting $5,000 an ounce gold no matter what is going on....for years on end.
But, hey, at least Peter makes 6% off the gold that he sells on his sites so he has an unbiased opinion.
Don't get me wrong, I actually like and listen de Peter's podcasts. He makes some good points on the economy, however he gets all crazy and irrational when discussing Bitcoin (every time more often hehe), he knows deep inside it's coming to take his lunch and he's afraid of it.
I agree. Ole Peter isnt a stupid man. He knows what the score is and what he is doing out there. He has an angle and he is playing...to the very end.
Gold is his, well, golden goose which means he isnt going to slay it. Ultimately, BTC kills the gold market since it has all the attributes of gold for a store of value PLUS it is limited to 21M (so absolutely no more than that) and you can have all your possessions taken from you and yet still have your bitcoin accessible once you get to an internet connection.
Gold cannot do that....I am sure if they take all your possessions, they wont let you leave with the gold.
Anyone trying to escape communist Cuba in the 60s knows gold is a not a good store of value. They took everything of value from people leaving at gun point. If only BTC had existed back then....
@cryptoeagle bitcoin and the great cryptos out their are the heaven for people that are opressed by their governments or institutions. Would have been a completely different situation if blockchain and cryptos would have existed by that time. @gold84
Yeah anything physical they can take from you at gunpoint. It happened many times throughout history.
Now with the internet, dont even need to keep the numbers in your head...upload them to a few different places and just remember your passwords.
As for Cuba, Fidel might not have had the run he did if bitcoin was around.....
Very useful to align the total market with other markets. I miss other fiat supplies, and the total bitcoin/cryptocurrency market (easy to find, but belongs inside the article).
Im following you and i try not miss anything that you post, i like your points of view and perspective on crypto man. Could you make more post about new tokens or coins that look promising? Are you still bullish on nav coin? And what do you think about zen cash, civic and omise go?
I still like NAV coin. Also doing a series on the top 100 coins, some of them are new so when I hit those they will be covered definately, also there is an ICO coming up called Monaize which I might do a video on. It doesn't seem to be a total scam ICO.
Cryptocurrencies are the future and thank goodness that we are part of it..good post....
that's very helpful post!!
thank you ;)
I agree with your assessment. This carriage is not stopping anytime soon.
What do you think happens to supply and demand when Wall Street really starts to put money into this space?
I would say the demand side of the equation is going to explode.
Yes, it would explode.
Really nicely explained thanks for this post btc is unstoppable
Daily Learn some new from your post. Love to read it.
Thank for information