Everytime I think about this, I feel that this market has all the ingredients of a bubble.
1. It has a story that sells. You really can't expect bubbles to form in established industries like manufacturing. Cryptocurrencies on the other hand has a new, technologically advanced feeling to it. Regardless of whether blockchain tech changes the world, it's a great selling point.
2. It's incredibly easy to buy cryptos. Making an account at a bitcoin/altcoin exchange is almost as easy as making an email account at google. This is why we have so many average Joes participating. I'm based in a Southeast Asian country, and a lot of people here shun stocks but buys crypto. It also helps that you can buy cryptos with a small amount of money and get your feet wet.
3. To put things in perspective, during the dotcom bubble era, market cap of tech companies reached 3.7 trillion dollars at its peak. The market cap of cryptocurrencies as a whole is at 0.5 trillion currently. That was 20 years ago and capital markets have gotten bigger, so if things get crazy as back then, the market cap could go easily above 5 trillion. Also note that crypto markets are international markets, not confined to the US only.
4. The supply demand characteristic of cryptocurrencies are perfect for spectacular melt ups. First of all, the supply is capped so you can't increase supply in response to price increases. A significant part of the supply is held by founders or the few individuals who got in the game early(bitcoin and alts alike), and they don't trade actively. Thus the circulating supply is small, when price moves people jump in(fear of missing out), and we get 400% moves in a day like recently in XRP.
5. The bull market of 2017 was fueled mostly by retails investors. Just think about how prices would move if institutional investors start piling in. Crypto oriented hedge funds are popping up left and right, and we are now entering the mass adoption phase.
Michael Novogratz said that this is going to be the bubble of our lifetimes, and I think he is right. All the ingredients are here for this thing to metastasize in to something big.
1. It has a story that sells. You really can't expect bubbles to form in established industries like manufacturing. Cryptocurrencies on the other hand has a new, technologically advanced feeling to it. Regardless of whether blockchain tech changes the world, it's a great selling point.
2. It's incredibly easy to buy cryptos. Making an account at a bitcoin/altcoin exchange is almost as easy as making an email account at google. This is why we have so many average Joes participating. I'm based in a Southeast Asian country, and a lot of people here shun stocks but buys crypto. It also helps that you can buy cryptos with a small amount of money and get your feet wet.
3. To put things in perspective, during the dotcom bubble era, market cap of tech companies reached 3.7 trillion dollars at its peak. The market cap of cryptocurrencies as a whole is at 0.5 trillion currently. That was 20 years ago and capital markets have gotten bigger, so if things get crazy as back then, the market cap could go easily above 5 trillion. Also note that crypto markets are international markets, not confined to the US only.
4. The supply demand characteristic of cryptocurrencies are perfect for spectacular melt ups. First of all, the supply is capped so you can't increase supply in response to price increases. A significant part of the supply is held by founders or the few individuals who got in the game early(bitcoin and alts alike), and they don't trade actively. Thus the circulating supply is small, when price moves people jump in(fear of missing out), and we get 400% moves in a day like recently in XRP.
5. The bull market of 2017 was fueled mostly by retails investors. Just think about how prices would move if institutional investors start piling in. Crypto oriented hedge funds are popping up left and right, and we are now entering the mass adoption phase.
Michael Novogratz said that this is going to be the bubble of our lifetimes, and I think he is right. All the ingredients are here for this thing to metastasize in to something big.
