The total crypto market capitalisation has fallen by over $200b since breaking the $3 trillion mark last week. However, many have remained bullish, seeing this correction as a healthy movement in a continual upwards trend.
The once fledgling market of cryptocurrencies took over a decade to reach $1 trillion in market capitalisation, but is now adding value rapidly. There was a time when the comparison of the crypto market to other companies or banks showed the insignificance of crypto. Now, however, the crypto market competes with the heaviest hitters in the world. For comparison the crypto market capitalisation now sits at $2.8t, while Microsoft sits at $2.52t, Apple $2.46t, Saudi Aramco $2.0t, Google $1.97t and Amazon $1.78t.
Bitcoin itself stands at $1.57t. Far above Tesla’s $1.03t, Facebook/Meta’s $948b and some of the biggest banks such as JP Morgan at $493b.
How does Bitcoin dominance come to play in the larger Crypto market cap?
Bitcoin was the first cryptocurrency to launch; in its inception it held close to 100% of the market cap for the first years of crypto. As new cryptocurrencies launched, there was still relatively minimal competition, with a dominance held around 80-90% until the bull run of 2017.
As blockchain technologies began to adapt and new platforms such as Ethereum launched, the dominance fluctuated and shifted to 60-70%. This altcoin growth was attributed to new utilisations in smart contracts and decentralised applications (Dapps), all based on blockchain tech. Currently, Bitcoin sits at 41% dominance.
The multitude of value propositions within the crypto market
Crypto markets now stand in their own right and their value propositions may, in the future, encompass or compete with the same technologies of current tech giants.
For example, the DeFi sector with its growing Total Value Locked (TVL) at a whopping $241b. This may forebode a direct future threat to traditional bank loaning systems.
Another well-known example is the Bitcoin versus Gold question and what may be a better store of value.
Even stocks of said companies can now be traded on crypto markets as synthetic shares on the blockchain via various projects or NFTs. Social media platforms on the blockchain as well are launching.
As these markets mature, so may their growth patterns.
Volatility
A persistent aspect of this emerging asset class is its ongoing volatility. Historically, many price drops have already been equivalent to 50% or more when bull markets have taken a hiatus or ended.
These can come in the form of recent over-leveraged trading, causing the market to correct in May of this year by around 50%.
Psychological barriers and profit-taking were the obstacles in 2017. Bitcoin smashed through the $10,000 mark and within days reached close to $20,000, only to be rejected and end the bull market. Ultimately this slowly brought BTC back down to the $3000 point where it built its base for resurgence both in 2019 and 2020.
With altcoins taking a larger share of the market size, the multitude of projects, some still in their fledgling steps, brings an even higher possibility for volatility.
While the crypto market cap has since pulled back after passing the $3t mark, trends are still showing the bull run isn’t stopping with institutional investment still pouring in. So yes, celebrate the milestone. Just know there’s a long road ahead, and it can and will be bumpy.