Sometimes, the big bull run of December/January feels like an unrealistic peak we may struggle to see again. After all, relative to prices only 10-12 months prior to that, where you could pick up a bitcoin for less than $1000, the gains seemed astronomical. It finally seemed as though crypto had entered the mainstream as the global marketcap peaked at around $830 billion. Now, of course, such highs seem so far away.But then it got me thinking of the broader picture. That huge high in crypto, that feeling of the world fomo'ing in, only created a global crypto marketcap around the same value as one company, Amazon, with a marketcap of $824bn at the time of writing.And now, the total marketcap value of Bitcoin, around $110bn, is worth less than one man: Jeff Bezos.To put it another way, even at its peak, all of crypto was worth just 3.5% of the S&P 500, which in itself is a very small percentage of the global company stock asset class.It made me realise just how much of a drop in the ocean cryptocurrency has always been, even at its peak, particularly for a brand new asset class. We've been a part of something that appeared to be taking over the world with its hype, yet it barely scratched the surface of the global economy.It's been without regulation, without proper custodianship and without an asset-backed ETF. Banks have been cautious about it, and a huge amount of high value trades have remained OTC. Even now, the amount of people on earth who own crypto is tiny, not to mention the the lack of serious investment from major institutions, fund managers and so on.When you take a step back and look, you realise just how infantile the crypto asset class has been in pretty much every way. The actual amount of fiat that has entered the market, in the grand scheme of things, is laughably small.Yes, the total crypto market volume touched the daily volume of the NYSE a few times, but we're comparing volume that was overwhelmingly crypto-to-crypto over 24 hours, to the pure fiat volume of 6.5 hours on one of dozens of stock exchanges worldwide. And that was at the very peak. Meanwhile, forex daily volume amounts to the trillions.I used to laugh at people who post that "Wall Street Cheat Sheet" bubble chart and point an arrow to the "hope" bump prior to the bubble to claim that this is what the Dec/Jan crypto bubble was. But I'm starting to wonder if they're right. There's still so much holding cryptocurrency back as a valid asset class, and I don't even think we're close yet to having the foundations in place for it to be taken seriously.This isn't intended to be hopium. Cryptocurrency might die off or reach ATHs like we've never seen before. I don't know.All I do know is that in every aspect, from regulations, to institutional frameworks, to financial instruments, to adoption, to fiat volume, the progress in these areas relative to more established asset classes is less than 1%. Let's get the bare basics in first and then we'll see what cryptocurrency can do.
Submitted July 02, 2018 at 08:17PM
No comments:
Post a Comment