The Trillion Dollar Club

The Trillion Dollar Club

Did you see that coming? Because I did not see that coming.

Last time we talked I was in absolute disbelief that bitcoin had smashed through its 2017 all-time high, posting a new record at US$23k.

Well, if that was absolute disbelief, then you can imagine my response to the last three weeks of price action, which culminated not only in the bitcoin price crossing $50,000 (briefly making it the seventh most valuable asset in the world), but the entire cryptocurrency market cap reaching one TRILLION American dollars. With a T. Trillion.

And if you can’t imagine, well, here’s an artist’s impression.

Merry Christmas, ya filthy animals

Thing is, it’s not even like I’m looking at what happened and thinking “classic bitcoin, pumping for no reason”. Every day of the festive period it seemed like we got a new, even more bullish piece of news, as if we were living through some frankly erotic crypto fantasy version of the 12 Days of Christmas.

You had giant (and not in any way high-risk) insurers and investment funds announcing their new hundred million dollar stakes in bitcoin. Hedge fund One River Digital conducted one of the single biggest transactions crypto has ever seen. MicroStrategy bought another US$650 million dollars worth of bitcoin using investors’ money; Morgan Stanley now owns 10% of the company. And all throughout bitcoin kept on flowing off exchanges and into cold storage, indicating that these new investors were here for the long haul.
Right now, companies, funds and ultra-high net worth individuals account for around 6% of the entire bitcoin supply. It was 2% a few months ago.

And the alts?

Look, things did look a little dark when the SEC sued Ripple for being an unregistered security and American exchanges started dropping it like it was one of Donald Trump’s social media accounts. But then Ethereum blasted back over US$1000 and alts of every stripe followed. The boom was overdue, but it certainly wasn’t hindered by the US Treasury OCC announcing that banks were now allowed to hold, use and transact with stablecoins and blockchain-based systems.

A few days later, the entire market crescendoed, crossing the US$1 trillion benchmark and making crypto roughly as valuable as Apple or Amazon. Which is really quite impressive for a total scam lol.

Best come correct

Of course, things have stumbled since then. As euphoria overtook the market, most coins shed 20-30% of their value in 24 hours. These sorts of corrections can be horrifying to watch, but are both necessary and, in this case, frankly overdue. As a general rule, assets of bitcoin’s size and liquidity shouldn’t double in a fortnight.

But even after the drop, bitcoin was still trading around 75% higher than it was before Christmas. And if you’re looking at those sorts of gains, the temptation to sell out can be almost overwhelming. It all just seems so unlikely that the price could ever go any higher. Best lock in what you’ve got and count yourself lucky.

Well, here’s something to consider. If you invested $1 in bitcoin in July 2010, you’d have $800,000 now. All you needed was a little patience. Or another way to put it: the bitcoin price now is roughly equivalent to bitcoin hitting $2000 in 2017 after first crossing the 2013 all-time high. And, well, it did another 10x from there.
There will come a time when selling makes sense, but with institutional money flooding in, coins heading into cold storage and a retail wave that isn’t anywhere near where it was in 2017, we reckon the crypto story is just getting started.

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