To say that cryptocurrencies took the market on a wild ride this year would be like calling the Hindenberg a birthday balloon. Bitcoin exploded sixfold. The second-most valuable cryptocurrency after Bitcoin, Ethereum rocketed 3,700% this year. It started 2017 at a humble $8 and soared to $308, as of Nov. 12. But for many reasons, it may not be in a bubble. It still has miles to go before reaching Bitcoin, $5,700, and Bitcoin Cash, $1,588.
After jaw-dropping gains this year, the top cryptocurrencies have fallen into a bear market. Bitcoin has corrected 23% from last week’s all-time, intraday peak of $7,776, according to CoinMarketCap.com. Bitcoin Cash has tumbled 36%, as of Nov. 12, from an intraday apex of $2,477 reached earlier the same day. Ethereum is off 22% from an epic high of nearly $400. A 20% drop or more from a 52-week high is considered a bear market.
Ethereum Facts as of Nov. 12, 2017:
Year-to-date price change: 3,700%
The cryptocurrency craze of 2017 has been compared to the Internet bubble of the late 1990s and early 2000s. If it is a bubble, it’s still a far cry from the magnitude of the dot-com crash.
As massive as the cryptocurrency market is at nearly $192 billion strong globally, it pales in comparison to the tech bubble, which erased $1.7 trillion in shareholder wealth. From an aerial view, Ethereum looks minuscule compared to other assets. Bitcoin, at $97 billion in market value, dwarfs Ethereum, valued at about $29 billion, according to CoinMarketCap.com.
The U.S. market for rare coins, which you would never use to buy something, comes to $5 billion in sales through auctions, shows, etc. annually. Global sales are estimated to be high as $8 billion. There’s no telling the value of all collections’ parked in vaults across the country.
Deloitte values the global art market at around $3 trillion with $50 billion in annual sales. The amount of money sloshing around in the U.S. stock and bond markets totals more than $26 trillion and $31.2 trillion, respectively.
A major difference between two most popular cryptocurrencies is that there are no limits on the number of Ethereum tokens to be issued whereas Bitcoins are capped at 21 million. Besides being a store of value, the Ethereum platform lets developers build applications such as smart contracts and initial coin offerings, ICOs.
“Of the many cryptos, I see Ethereum as the most credible as it makes creating new blockchains easier,” said Harry Dent, an economist and author of the forthcoming book, Zero Hour. “It advances the whole industry, and I obviously think this is a major trend, not just a near-term bubble, which it is.”
Ethereum allows individuals and organizations to build out and conduct complex transactions independent of a central server or relying on any one party to approve the submission, explains Dominic Marella. He’s a principal at Icon Alternatives, a Chicago-based alternative investment firm that specializes in futures contracts.
“JP Morgan built Quorum using the Ethereum protocol,” Marella said in an email. “The network allows for fast, secure and more transparent processing of customer transactions, such as bill payment and transfers.
“NotarEth, a notary service that verifies your identity via the blockchain technology and eliminates the need to show an ID with a stamped document.
“UJO is a music licensing and payment system that gives more rights directly to the artists, as opposed to big record labels.”
Investors seem even more enthusiastic over Ethereum than Bitcoin on the Nasdaq Stockholm exchange in Sweden. CoinShares Ether ETNs — Ether Tracker One and Ether Tracker Euro — pulled in $10 million in investor inflows in their first week of trading. By contrast, the firm’s Bitcoin ETNs took a year to attract $10 million in assets.
“The community that was demanding the product has shown up in full force,” Ryan Radloff, principal at CoinShares, said in a statement. “And now, the community has a new request: research.”
CoinShares Bitcoin ETNs launched in 2015 and have attracted $330 million in assets. The Ethereum ETNs debuted in October.
More Info: www.forbes.com
Categories: Money Matters