Dec 20, · Even following its monumental rally, bitcoin has a total market value of $ billion. That compares to approximately $ trillion in global gross domestic product (GDP) in So you can give anything a market cap value, even nations, so let’s take a look at how Bitcoin’s value would compare to the average nation. It turns out that it does pretty darn well. In fact, if Bitcoin’s $20 Billion market cap were a nation, it would now have cracked the top 50 nations in the world, according to World Bank data from Dec 16, · Bitcoin's latest record high has reminded many market watchers of its monster rally to nearly $20, in That was followed by a sharp pullback the .
Value of global bitcoin marketAll of the World's Money and Markets in One Visualization - Edition
Experts say this is due to a monetary rule implemented by the cryptocurrency's mysterious inventor, Satoshi Nakamoto. Skip Navigation. Markets Pre-Markets U. Key Points. It comes as big-name investors like Paul Tudor Jones and Stanley Druckenmiller have invested in the cryptocurrency.
VIDEO More institutional investors using bitcoin as inflation hedge, says Gemini's Tyler Winklevoss. Squawk Box Asia. While it's unlikely that a community consensus would be reached to increase the circulating supply of bitcoin, the possibility of this happening isn't zero.
By comparison, a precious metal like gold has a hard supply limit. We can't use alchemy to make more gold. The only gold that's available is what's been mined or is still underground. When the only parameter of scarcity is written computer code, that's not true scarcity.
Another buy thesis of bulls is that bitcoin's utility is growing by the day. More businesses are accepting digital tokens for payment, and a broader swath of people are buying bitcoin tokens for the first time. According to financial services company Fundera, around 2, U. More than a dozen multinational companies also accept bitcoin. Slam-dunk proof of increasing utility, right? Not so fast.
There are not nearly enough tokens in existence to drive widespread adoption, based on these figures. As one additional note, there are about Removing these nonemployer businesses leaves 7. Census Bureau in According to Fundera, just 2, of these businesses are accepting bitcoin.
Bitcoin bulls are also pretty convinced that the most popular digital currency is now a bona fide store of value: i. When coupled with the central banks' pledge to keep its federal funds rate at or near record lows, it's pretty evident that the U. Crypto investors believe that a ballooning money supply is a green flag for bitcoin to head significantly higher. The issues I have with the store-of-value thesis are twofold. First, bitcoin isn't backed by any other asset or government. Therefore, it has no tie-ins or official relationship to the movements of the U.
Implying that a ballooning money supply should push bitcoin higher is nothing more than a dart throw. Second, store-of-value assets are designed to maintain their value over time and protect investors from volatility. Yet in March, bitcoin nearly lost half of its value in a hour period.
In , bitcoin lost about half its value in about six hours. This isn't how a store-of-value asset behaves. Bitcoin optimists will also crow about bitcoin leading the digital payments revolution.
Going cashless could resolve the issues created by certain regions of the world being underbanked. Additionally, the blockchain technology that underlies bitcoin could revolutionize the payment processing and settlement time frame, especially in cross-border transactions. While I don't disagree that a digital payments revolution is underway, or that blockchain could offer global financial and supply chain solutions, bitcoin isn't the vessel that's going to make this vision a reality.
The interesting thing about blockchain is that it can be tethered to multiple types of digital currency, be used in conjunction with fiat currency, or can operate independent of a tethered token. There's absolutely zero evidence that bitcoin is necessary to support a blockchain revolution. To add, buying bitcoin tokens does not give an investor any ownership in the underlying blockchain.
With no ownership in the solution that has the potential to actually drive this digital revolution, bitcoin investors are pinning their hopes on other investors being willing to pay more for a currency that exists only in computer code than they did.
So, why is bitcoin rallying? I'd surmise it's a combination of short-term emotions, technical analysis i.