What's Fueling This Massive Rise In Altcoin Valuations?

in cryptocurrency •  8 years ago 

Asia Asia Asia!

Earlier today Bitcoin was inching ever closer to $2100 USD. That, after smashing through the $2000 barrier the day before. Seemingly on an endless move higher. 

What's even more astonishing is the moves we have seen in the altcoin space. 

For those of you new to the space, altcoins are defined as:

"The alternative cryptocurrencies launched after the success of Bitcoin. Generally, they project themselves as better substitutes to Bitcoin. The success of Bitcoin as the first peer-to-peer digital currency paved the way for many to follow. Many altcoins are trying to target any perceived limitations that Bitcoin has and come up with newer versions with competitive advantages. There is a great variety of altcoins." (http://www.investopedia.com/terms/a/altcoin.asp)

The entire crypto space has seen a massive increase in it's total market cap over the past few months as noted here:

https://steemit.com/cryptocurrency/@jrcornel/the-cryptocurrency-market-cap-breaks-usd60b-for-the-first-time-ever

It was originally reported that the entire space accounts for over $60 billion in total market cap. Well, as of late yesterday that number officially moved to over $70 billion in total market cap. Money is flowing into the space at an alarming rate. 

What's astonishing is that Bitcoin is accounting for less than 50% of it for the first time ever:

https://steemit.com/bitcoin/@jrcornel/bitcoin-now-accounts-for-less-than-half-the-market-cap-of-all-cryptocurrencies

Who exactly is driving this move?

That depends which move you are talking about. The rise in Bitcoin or the rise in the altcoin market?

The most recent increase in Bitcoin prices can mostly be attributed to institutional investors in the US, Japan, and South Korea. 

If you compare the South Korean dollar volume in this chart with the one at the top from a few days ago you can see a massive increase in KRW dollar volume in just the past couple of days. 

There is also an arbitrage opportunity that currently exists between US based Bitcoin exchanges and Japanese and South Korean Bitcoin exchanges.  

Bitcoin is currently trading near $2300 on those Asian exchanges while on the US based exchanges it's trading just under the $2100 mark. That represents a 10% premium for those wanting to play the arbitrage game.

The CEO of CryptoCompare, Charles Hayter said that the arbitrage opportunity is a big reason for the recent price surge in Bitcoin saying: 

"Arbitrage between the fiat pairs drags markets up or down in line with leading markets. At present, volumes on the KRW and JPY pairs dominate trading with a combined 48 percent market share.” 

The increase in altcoin prices is likely coming from a different kind of investor all together. 

The legalization of digital currency and the elimination of consumption taxes on virtual coin transactions in Japan have convinced beginner and casual investors that ALL cyrptocurrencies are created equal. Bitcoin's success has created a false sense of confidence among less sophisticated investors. 

According to Japan-based researcher and IndieSquare co-founder Koji Higashi, most investors are investing in cryptocurrencies apart from Bitcoin with relatively shallow knowledge and understanding of digital currencies. He went on to further say:

“I think I know the answer now. Newly entering Japanese investors are driving this great altcoin bubble and not-so-smart money is flowing into the space especially into some altcoins at a rather concerning rate. Another thing to note about this new trend is that the general lack of understanding or appreciation of the technology by many of new users.”

So, we have institutional money flowing into Bitcoin and we have new, first time, mom and pop' investor money flowing into the altcoin world. There is a good chance at least one of these are in a bubble, which one would you put your money on?

There are several other factors fueling the demand for altcoins, including the large number of new exchanges being created in Japan and South Korea. The most popular altcoins are being added to those exchanges almost daily. 

There are also rumors that Russia may go the same route as Japan and other parts of Asia in the next year or so. Can you image the kinds of prices we could see if that happens as well as if many other countries join the party?

Enjoy the ride my friends!

Sources:

http://www.investopedia.com/terms/a/altcoin.asp

https://cointelegraph.com/news/japanese-investors-might-be-fueling-the-next-altcoin-bubble

https://cointelegraph.com/news/bitcoin-price-hits-2087-trading-in-japan-south-korea-for-2350

Image Sources:

https://cointelegraph.com/news/bitcoin-price-hits-2087-trading-in-japan-south-korea-for-2350

Follow me: @jrcornel

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Haha I like that! We have only just now opened the wrapper ;)

All the gift wrap is scattered... and those martini glasses aren't empty ... yet.

I've seen projections that say upper possibilities could be 1 trillion by 2023 that's alot of cheddar. Like Planet Cheddar

That seems possible, and hopefully true :)

very possible.

1% of m2 money supply in btc, man that would be astronomical

Well if we talk about mass adoption this marketcap is nothing at all!

Yep, the entire crypto market cap is not even 1/10th of the market cap of Apple alone.

yeap. I would call it a bubble when my neighboors start talking about icos. that's when you pull out a bit.

EXACTLY! Compare 72 billion with the world economy.

True, however it is still very, very early. Less than 10 years since 2009!
The Blockchain is big change and I highly doubt if it will go away anytime soon.

Agreed!
Presumably the decentralized aspect of cryptos is far more important than most people fully comprehend. The central banks hate competition because they can't compete with Blockchains by using martial law and/or terrorism.

Long story short: the dollar is slowly sinking but I've heard some say that it will take about 5, 10, 20 years. Don't know for certain. We are all on our own...

I don't think the alt-currency movement is gonna go down much at all. Dollars and gubmint centralized currencies are losing value while these decentralized blockchains look to be a way to hold value.

Calling this a bubble ignores the accumulating evidence of the blockchain's success.

I think I might just be holding for a while based on this knowledge. Great piece mate!

You got it. It seems like we could go a lot higher still. I am sure there will be some big dips along the way though.

Agreeing with the both of you. It will be quite a ride.

I believe this will continue for a good while, and I'm a skeptic about most things (name :P). This is different than most "bubbles". This is an emerging market. I think this is just one of many "waves" of new money coming in which will lead to a multi trillion dollar industry. I'm not saying there will be no retraces, but on the whole it will keep going up without much of a break. This will be a strong call to big money to wake up and do some research on this exciting field!

I agree. You look new here. Welcome to Steemit!

Thank yi!

Congratulations @jrcornel!
Your post was mentioned in my hit parade in the following category:

  • Pending payout - Ranked 10 with $ 451,51

Methinks F.O.M.O. to be honest.

Definitely a lot of that going around right now.

Excellent stuff.
I wonder how much the scaling debate is hurting Bitcoin? I moved Steem today so fast it seemed like it was instant. Last Bitcoin I moved waited half the day to find a block....

I know what you mean. Bitcoin usually takes me at least 40 minutes any time I move it.

If you ask me, i notice a lot of information coming in to the market the last months. What i mean is that newspapers in Holland, websites, daily news, radio are talking more and more about Bitcoins. Besides that the are also nameing altcoins in these newsflashes. People arround more are getting interested in cryprocurrencies more and more, even the ones sceptical in the beginning. Based on that i would say; we are still at the beginning, but a Buzz is created at the moment, not only early adapters are interested anymore.

Well i think its the investors who have missed. I myself came to know about cryptos a year back. i feel cryptos are sky rocketing because of more and more new investors, rest of the factors matter alot less.. Iv been sharing info to many about them, but most of them still ignore, infact iv spoken to people with degrees in economics and MBA in finance, they still feel its not going to work, lol. so i guess there will be alot more buying once almost every will come to know, however its gona take sometime, but i guess by then cryptos will become far more expensive. So as per me, its the new comers/investers that that are driving this rally..

The world is starting to wake up to the fact that the the bankers have been lying to us and they and their money can no longer be trusted. Great Post

This really seems like an exciting future for us all!

Hope so!

Amazing price!!!

Thank @jrcornel

Follow you...

Thank you!

Has to be Asia. They're the only ones with any money. @froghollow

They are out in full force buying it all.

good news and it will only go up

  ·  8 years ago (edited)

Good article with interesting data.
I see the valuations of many altcoins extremely high. I could say that they are in bubble territory.
BTW I resteem it and upvoted.

Thank you!

There will be a day in our lifetime when you can not buy bitcoin/precious metals with fiat currency. If your not in precious metals and crypto your on the wrong side of history.

I can understand that for fiat currency, but metals are more than mere money. They are actually useful goods, and for that reason, I cannot agree that, as long as cryptocurrency exists, there might be a time when there will not be a market for them.

Interesting statistic about Bitcoin accounting for less than 50% right now, personally I see most of the alt coins going to zero and just a few remaining, but time will tell I guess.

I could see that as well, but it will take a while for that to happen. Tons of money pouring into this space will keep them inflated for a long time. Hopefully Steem is one of the few that remains when the tide eventually goes out.

  ·  8 years ago (edited)

Yes this will end in tears for many folks. I just witnessed the price of 'Bytecoin' and what a joke! When many lose their shirts you'll see this in the MSM. This will drag bitcoin back into the spotlight.

The narrative will probably be, 'We need more government to regulate this activity so this doesn't happen again!!'. Of course, more government isn't the answer. People that speculate (gamble) and lose on their alt-coins is their problem. When this shit blows, it will be epic!!

Grab some popcorn, your favourite beverage and just watch.

True, but how high will it go first before this happens?

I am concerned about regulation, for reasons. It seems to me that the banks aren't accepting of a currency that doesn't enable their shenanigans to concentrate it, in their hands. For at least this reason, I expect there will be moves to regulate, tax, and otherwise turn cryptocoin into cashcows for TPTB.

I have heard many times that cryptocash is immune to such, but, as long as people are entering the market, and xferring crypto to fiat to use it, there are easy handles to grab. Furthermore, as long as government is corrupt, banks are greedy, and propaganda greases those gullets, people will be susceptible to such attacks, meaning that cryptocurrency will be too.

If any have thoughts on this, I'd love to hear them.

Thanks!

Banks are embracing blockchain and will do everything in their power to reign it back in under their control. Just look at Ripple.

Bitcoin was suppose to be a new form of money, independent of any government or bank. Unfortunately, some people are desperately trying to tie the legacy banking system to it via an ETF, Ripple coin or anything they can put the word 'blockchain' in front of.

Predicting the future is tough, but you're correct that regulation is coming. I can't say that the bitcoin price will never crash or be gamed, but since it has no CEO, no President, no board of directors, you can't bomb it or place sanctions on it, I will just have to trust it. As more people continue to use it and flee the fiat paper system, I believe it won't go away anytime soon. Add to the fact that there will only be 21 million created means it can't be deflated away either. That's why I prefer it to keeping cash in a bank. Bank gives you no interest and it can be taken from you at any time.
No government can steal my bitcoin unless they have some mind reading machine that I'm not aware of.

Take care @valued-customer

Bytecoin is really a joke but nearly the 25% of the top 100 cryptocurrencies by market cap have some real value, even after a collapse in the market. Don't you think so?

Yes, some alt-coins have their place, but some of these are dog s*#t. Bitcoin is completely decentralised and has a cap of what can be created. Many of these alts try to emulate bitcoin's qualities but fall short. Like I said, only time will tell.

As for market cap, I don't really care how little bitcoin has of the total market. Irrelevant IMHO. When any Tom, Dick or Harry can create a new coin, what does it really matter? Big gov wants to come in and 'regulate'. Mark my words.

And that' after the face that Indians haven't really dived in the alt-coin market. Most of us are still learning Bitcoins!!!!

What a great post, very informative! Keep the great content coming!
I just wrote my 2nd article on Steemit: https://steemit.com/money/@jdawg/diversify-out-of-the-dollar
please vote and resteem!

I love you post @jrcornel
Applause 👏

Thank you!

You are welcome :)

The Japs!.....Apparently they are embracing it more than any of us.

China too. They have Bitcoin ATMs over there.

Wow, that's revolutionary!

A very fierce trade.

Who is the best?,

we just wait.

Bitcoin? Ethereum? Steem?

Bitcoin vs Steem

Yes, yes, and yes lol

good news...

Well, Asia needs to calm their tits a bit. We could use a healthy correction in these markets about now, IMO.

Great post master pf cryptocurrency, always follow your post for information

There is some many people coming to crypto everyday , that the price will rise like this in the next year! Let that Lambo Aventadores start producting

What does a price do after it makes a 52 week high? It makes another 52 week high!

Alot of the investment happening can be attributed to currency fluctuations as well... Those very countries that pay a higher cash value for BTC are typically countries that are having instability in their currency. The Libyan Dinar is a great example

Great point. There are many factors that I didn't include in this piece, that being one of them. The arbitrage angle was an interesting one in my opinion. The leading market will eventually drag the others up...

i want to believe that we are putting in floors on many of these altcoins and in bitcoin but there has to be a major correction coming soon right? I mean we have been going straight up for months now. it would be great to sell some positions and re-enter the market at a much lower price. what are everyone's thoughts on this?

It may be a bubble but it seems like a small bubble once you take into consideration we are really talking about 1 country here (Japan). Sure, that bubble may burst and there could be a correction but what if Russia makes cryptos legal tender? That new money would outweigh any type of correction. Then what happens when country after country follow suit? I think we are a few years off from a true "global bubble".

We're in a massive debt bubble that is popping. This is leading to a currency crisis and people are leaving fiat money and seeking real assets and cryptocurrency. Do you agree?

I agree that we are in a debt bubble, but I am not sure I agree that it is currently popping... why do you say that?

Loan demand is crashing, for one.

Is this also the reason for the insame rise in ethereum over the past few days?

Bitcoin Monotheist Article. Bitcoin has more risks than the average altcoin. Bitcoin has a hard fork risk with BU sitting at 40% hash power. Bitcoin has a transaction fee risk, with average transactions sitting at over $1. Bitcoin has a backlog risk, with backlogged transactions at 166,000+ and the trend in the backlog is up up up. This creates the transaction time risk, where if people don't pay enough, transactions are lost / delayed. Bitcoin has the technology risk, DASH, MONERO, ETHEREUM, RIPPLE are all BETTER technologies in functionality and metrics.

Bitcoin had the first-mover advantage, and as years go on, that advantage diminishes day by day. As one of my viewers points out from the cell phone world, Nokia cell phones were big. They are not so big anymore, better tech came along and people switched. And in a crypto environment, tech matters to techy people.

PS - Research Tim Draper and Tezos, large institutional money is flowing into crypto outside of bitcoin... this is a reason Ripple soared.

im from Indonesia and yes, in Indonesia it self bitcoin , blockchain and crypto world become a massive

I don't pretend to know anything about this, but I keep reading that China is buying the heck out of BitCoin.

  ·  8 years ago (edited)

Awesome post! Any suggestions on South Korean exchanges to use? Do I have to be able to read and write Korean to use these exchanges? Any concerns about pursuing this arbitrage opportunity as a US citizen (aside from the obvious financial risk)? I take it one buys bitcoin on a US exchange and sells it on a South Korean exchange. How does one transfer their bitcoin from the US exchange to the South Korean exchange?

Thank you.. wow- simply thanks! I am new to this and appreciate understanding!

Glad I could help. Hope you are liking your time on here so far!

I think another huge factor alot of people are leaving out is the fact that the largest country in the world ( in population size) India has outlawed their old currency. Most people my age (millennials) have lived in a world where the all mighty dollar is law and the idea that a currency can be outlawed is almost fiction, Until India did it. If they can do it any country can.

It is unfortunate that more than 50% of Indians are so poor they don't even have bank accounts (IIRC), and, for them, there can hardly be a worse calamity than the banning of cash transactions, or at least the 500 and 1000 rupee notes.

There seems to be very few and slim vectors for the unbanked to migrate to cryptocurrency.

Steemit might be the one, nominal vector for adoption of crypto in such a situation.

👌 👈