Bitcoin has recently hit all time highs, or almost hit it with 1166$, but I think this growth is unsustainable. Of course the 2016 dollar is much weaker than the 2013 dollar, so if we factor in the inflation as well ,then the price didn't went that far high.

However the market cap did expanded significantly, I think in 2013 it was somewhere around 11 bn$, while now it hit 19bn$, and that is truly impressive. That was real growth, outgrowing inflation, so by all means, Bitcoin did expand since then.

Now the problem is that this growth is unsustainable, without an economy backing it, you can't just siphon away value from the USD without having an economy backing it. Here are the issues I see:

1) Chinese Capital Controls.

Many of you know that the new revised Chinese Capital Control laws required to disclose KYC information and all other privacy invading information for people who want to trade more than 50,000 CNY, so the Chinese are probably funneling money through Bitcoin, and then moving it into USD.

This is the cause of the recent price growth, and while this gives a useful purpose to BTC, it is actually not that useful in the economic sense, and might be portrayed badly in the media.

2) The Bitcoin Network Clog

The BTC transaction system seems to be clogged from time to time, fees are already increasing rapidly, and some small businesses are going out of work. Faucets, micropayment systems, and other web-games, and the whole "making money online niche", whom used to recruit most people into Bitcoin, is now starting to fade away.

This is very problematic. The hand that fed Bitcoin since 2012 is now starting to get arthritis. The faucet and the referral business recruited more people into Bitcoin, than any other industry combined (if you include gambling in this).

But the fee problem is destroying exactly this industry. And while the Segwit is awaiting activation, the network itself can't wait. Other currencies are lining up to get a piece of the pie, especially those that support micropayments like Dash or even Steem.

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The annoying part is that most cryptocurrencies are highly correlated, this means that if BTC goes down, they all go down. And this is insane. Why would idiots cashout to Dollar, when it has a 10-20% real inflation rate and you pay all the banking fees, not to mention capital gains taxes, and it might result in your account getting frozen for 6 months? Why do people risk it?

At least I'd expect a cryptocurrency to be a hedge against BTC, but I can't find any. They all depend on Bitcoin, at least the major ones do, and the small ones are pump & dump anyway, they are probably no good wealth storage mechanisms.

So a person who wants to store money in BTC should be able to move it to a hedge cryptocururrency, when BTC goes down, and should not be forced to cashout to USD.

I hope some Gold or Commodity backed cryptocurrency would fulfill this role, but even Xaurum which is supposedly backed by Gold, doesn't fulfill this role. So we need a real cryptocurrency hedge to Bitcoin.

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