Bitcoin's Market Cap Is Better Reference Than Price
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Bitcoin has continued a breathtaking run and eclipsed $17,000 per bitcoin this morning. This puts the year-to-date appreciation of the digital currency at more than 135% against the dollar, while also being up 88% since the halving in May 2020.
All eyes are now on the all-time high price of $20,000. As a reminder, bitcoin moved from $10,000 to $20,000 in only 10 days in 2017. The digital currency spent less than 72 hours at that level before experiencing a nasty 80%+ drawdown that took almost an entire year to play out. The bears were out in full force during this entire drawdown. They were screaming that bitcoin was going to $0. They were telling everyone bitcoin was nothing more than Chuck E. Cheese tokens.
Well, in a wild twist of fate, oil futures went negative and Chuck E. Cheese went bankrupt, yet bitcoin still didn’t go to $0. In fact, it has come back with a vengeance. We are now sitting at $17,000 in price, which is leading many people to start the countdown to a new all-time high. The milestone they are waiting for is $20,000, but I’m not convinced that is the best way to evaluate an all-time high in price.
Nic Carter, from Castle Island Ventures, has been all over this for weeks:
Additionally, if we take a look at the new www.casebitcoin.com site, we can see a few other great data points:
This is important because I believe the market cap metric is much more important than the price of a single bitcoin. The supply slowly increases, so total market cap better represents where the market is over time. We are currently sitting at just over $315 billion — only 3 days in the history of bitcoin have ever been higher.
Price is not the only metric to watch either. Nic Carter put out a piece that hit on a bunch of other metrics that are at an all-time high, including wallet addresses with at least $10 in them, open CME futures interest, realized capitalization, bitcoin options open interest, bitcoin priced in various currencies other than USD, bitcoin held by Grayscale, and stablecoin free float. I highly recommend reading his write up here.
While the price, and many other metrics, are aggressively accelerating, there is much less discussion about bitcoin in the mainstream media and on social media platforms. Yesterday, Bloomberg wrote an article saying that no one is talking about it — the irony is awesome when one of the largest financial media companies writing an article claiming that no one is talking about something.
Additionally, we saw Bitcoin trending on Twitter in the United States this morning as well.
The momentum we are seeing is really strong. I have no clue where short term price movements will go. Bitcoin is a beast — it can increase and decrease in price rapidly. My thesis for the next 12-14 months continues to remain intact. If the mainstream conversation shifts at some point and people start talking about bitcoin like they did in 2017, we could see price movements even larger than I previously anticipated.
It is crucial during euphoric times like this to remember a few simple rules:
Don’t get cocky. The market is the ultimate referee.
Information and data can change quickly. Make sure you’re paying attention.
Be open to changing your mind if you get new information.
The best investors press their winners harder than anyone else.
It is our responsibility to educate and welcome everyone who shows interest in bitcoin, regardless of whether they were previously bearish or not.
Bitcoin will hit a new all-time high in market cap at some point and then eventually hit an all-time high in price. The bears will be proven wrong. The bulls will be vindicated. I’m just not convinced that this will be the end of the story. It still sounds crazy to many, but I believe we are watching the rise of the next global reserve currency. If that happens, we are all still so early.
Have a great day. I’ll talk to everyone tomorrow.
BONUS: I wrote a piece for Polina’s The Profile this weekend on the importance of focusing on HOW to think, rather than WHAT to think. Click here to read.
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Yoni Assia is the founder and CEO of eToro, the largest social trading platform in the world. He has been a Bitcoin proponent for almost a decade and was part of the team that built the original colored coins too.
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Retail investor behavior during recent crypto boom
I really enjoyed this conversation with Yoni. Hopefully you enjoy it too.
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