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$1 Trillion Market: How Does The Crypto Market Compare To Other Financial Markets?

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Crypto market watch

According to data from CoinGecko, the overall cryptocurrency market capitalization has reached a whopping amount of  $1 trillion in value, just a few days into 2021. This is another huge milestone for the budding crypto space, with over 6,124 digital assets currently listed. However, despite this landmark, the cryptocurrency market’s total capitalization compared to other financial markets is still a small fraction. Commodities such as gold currently boost a market capitalization even bigger than the whole crypto space.

Leading the race is Bitcoin, as the absolute leader in terms of its $674 billion market cap, sucking up to 68.5% of the market, followed by Ethereum whose market capitalization is of $135 billion, that’s 13.3% of the market dominance as at the time of writing this.

Since the end of Q2 of 2020, Bitcoin and the altcoins market have garnered unprecedented interests from a growing list of Institutions as well as a new influx of retail investors, with no sign of stopping. Huge investments have been flowing into crypto from firms like MicroStrategy, who has bought up over 70,000 bitcoins with future plans to buy more, and London-based asset manager Ruffer Investment, who dumped more than $740 million into bitcoin toward the end of 2020.

The $1 Trillion zone shows cryptocurrency as a potential safe-haven asset and a hedge against inflation that no longer sits on the marginal part of traditional finance and having the potential for greater risk-adjusted returns compared to traditional investments. This milestone enables the cryptocurrency market to have enough liquidity to deploy large sums of transactions, but still early enough for a 10x return.

The last time the cryptocurrency market has witnessed such a bullish rally was in 2017. When the overall cryptocurrency market cap reached around $829 billion before a deep plunge that resulted in a two year bear market. 

But how does the cryptocurrency market rank compared to other financial markets like the Forex and Stocks market?

Comparison of these three financial markets will clearly show that the cryptocurrency market is still nascent. Although the crypto market is just 12 years old, it still has enough room for big growth.

In November, 2020, the total stock exchanges have a combined market capitalization of $85 trillion USD by data from Spendmenot. Majorly, the stock market consists of New York Stock Exchange, NASDAQ, London Stock Exchange, Tokyo Stock Exchange as well as others. The New York Stock Exchange, however, is the largest stock exchange in the world, with an equity market capitalization over $25 Trillion in April 2020.

According to Brokernotes, the total market capitalization for the Forex market is around $1.93 quadrillion, which is 2.5X larger than the global GDP.  Also, $5.3 trillion dollars per are traded daily in the Forex market with his major transactions happening around 7 currency pairs; EURUSD, USDJPY, GBPUSD, AUDUSD, NZDUSD, USDCAD, USDCHF and while various transactions occurring across several crypto assets.

Both Crypto, Stocks and Forex markets are controlled by the market forces. The Forex market has the highest liquidity compared to others and its daily volume is about 53 times greater than the New York stock exchange.

Market capitalization is a well-known key metric for traditional securities. In the Stocks market, it consists of multiplying the amount of outstanding stock shares by the current stock price. While in the cryptocurrency market, is the circulating supply of tokens multiplied by current price.

Stock markets have always been analyzed via financial metrics and ratios. Measures like price-to-earnings ratio, earnings per share, the current ratio, earnings growth etc. Most cryptocurrency startups or companies do not publish their financial statements, so the market capitalization provides a quick and easy check on how valuable a cryptocurrency is while other key metrics are volumes, futures premium and top traders’ position at major exchanges.

An article released by Conhen & Co on October, 2020 in which several experts in the crypto space at Cohen Client Conference discussed the maturity of the cryptocurrency marketplace and ecosystem. On the scale of 1-10, the panelists response ranged from 2 to 6.

Cryptocurrencies are here to stay. Recently, the Office of the Comptroller (OCC) of Washington recently published a letter allowing Federal Chartered Banks and Thrifts to allow stablecoins i.e USD Coin (USDC) as a mainstream payment medium for all forms payment and transactions. This is a significant indicator that the cryptocurrency market is still a baby growing into maturity in terms of growth and diversification.

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Crypto Assets

Crypto prices drop as global market fear increases

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Top cryptocurrency prices have fallen amidst a drop in stocks and fears over China’s Evergrande debt crisis. In the last 24hour, Bitcoin dropped from $47,772 to $42,630 shedding about 8.58%. this is the lowest in price since another bull run began on Sept 5 after the April crash.

El- Salvador’s President, Nayib Bukele sees the fall as an opportunity to invest more. Recall that the country adopted Bitcoin as a legal tender on September 7. Despite the adoption, the price of Bitcoin has fallen by almost 14% since then.

Other coins have experienced dramatic crashes within the last 24hours. Solana, a coin that has experienced 355% growth within the last 3 months fell from $162 to $130 shedding about 11.39% within the last 24hours. Solana’s fall may be categorized by the 17-hour outage which the founder, Anatoly Yakovenko said was caused by bots “flooding the networks”

Ethereum fell by 9.37% while Dogecoin and Axie Infinity fell by 11.22% and 14.14% respectively within the last 24hrs hours. While crypto experiences dark Monday, El-Salvador keeps investing more money in Bitcoin.

A look at the global market

The global market is experiencing fear due to the Evergrande debt crisis. A report published by the University of Michigan shows that consumer’s sentiment is beginning to decline. This trend alone may impact the crypto market as well.

On the other hand, the global market downturn must have been spurred by the Evergrande debt crisis. The company grew to be one of China’s biggest companies by borrowing more than $300bn. Last year, Beijing made rules to control the debt owed by big real estate developers. This led Evergrande to offer its properties at major discounts to raise more money to keep the business afloat. Right now, the company is struggling to meet the interest on payment of debts.

Why would it matter if Evergrande fails?

The collapse of the multi-million dollars company would affect the global market; including the crypto market. Many people bought properties from Evergrande and they expect to make gains. If Evergrande falls, crypto investors will be forced to withdraw more money to keep their business running without the means to invest more. When one business fails, the other gets affected indirectly. This also applies to other firms that do businesses with Evergrande.

The potential impact on China’s financial system is another effect of Evergrande’s fall. In his statement to BBC, Mattie Berkink, the Economist Intelligence Unit (EIU), said that “the financial fallout would be far-reaching. Evergrande reportedly owes money to around 171 domestic banks 121 other financial firms” if the company fails, other lenders or businesses may be forced to lend less. Thereby leading to a credit crunch- a situation where companies struggle to borrow money.

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6 Cryptocurrencies to leverage for Building Personal Wealth Long Term

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“Investing in Crypto should be viewed as another path towards financial independence that can help people beat inflation over time.”

—Alex Mashinsky (CEO, Celsuis)

The Crypto market is blooming. Nearly 1 in every 3 individuals in Africa, particularly Nigeria, currently trade cryptocurrencies for one purpose or the other. For more than a decade now, blockchain technology has pervaded the financial markets and persistently received traction from various quarters. Its adoption rate in Africa is a force to be reckoned with. The reports are glaring enough. This has then cultivated the growing appeal of the people in trying to employ crypto as a viable tool to build wealth, albeit long term.

Recently, thousands of cryptocurrencies were known to exist in the market and the numbers keep expanding. It is, therefore, imperative that these digital coins are closely observed to identify the favourable ones for a long-term game. We, at Decentralize Africa, know this. You don’t need to make any emotional rush. This is why we’ve put together highlights of sustainable cryptos that can help you build a fortune over time if you play your cards right.

  • Ethereum (ETH)

Coming first on the pack is Ethereum. The reason for this is not far-fetched. Earlier this year, ethereum was said to have amassed a market capitalization running into billions of dollars. As if that is not enough, Ethereum pointed out its plans to remake its consensus algorithm. This will in no small measure help the crypto network perform several seamless operations and that too with reduced energy. 

The major change that was done to Ethereum’s network, i.e, a modification to Proof-of-stake, will enable players in the system to pitch ethers in a more protected and also rewarding account. This is quite comparable to the bitcoin system. So, yes, Etherum is something that should be in the plans. 

  • Stellar (XLM)

Of course, Stellar has to find a place here, innit? For one, the cryptocurrency holds promising potential for those interested in the long shot. It is more or less a fertile space in the string of blockchain networks. Most of us are privy to how tedious, cross-border transactions tend to appear. This is where Stellar comes in. The versatile platform is capable of completing payments in a matter of seconds at a meagre fee; which is payable using the Stellar coins. Stellar’s efficiency is no doubt commendable. Although like most coins, it has had its share of a downward trend in prices, there is no doubt that Stellar is yet to reach its peak. As such, analysts have observed that there’s room for expansive growth as the year’s roll by. 

  • Bitcoin (BTC)

This sequence is deliberate though. We all know the mighty bitcoin will be here, don’t we? Bitcoin has amassed a wild price range, an ever-growing market capitalization and its prospects for investment opportunities speak loud enough. Although there is an influx of cryptocurrencies today, Bitcoin embodies a large percentage of the market value. 

Investing in bitcoin is never a bad business. It has its lows of course, but it jumps pretty back in most cases. Its wide acceptability is a testament to this fact. Several companies are integrating bitcoin in their payment structure, and business-men, banks are not left in the loop as well.

  • Solana (SOL)

Interestingly, Solana is one of the few digital coins to maintain a steady rise in value. It came up the pack in 2017 and has since improved its value system over time. It offers enticing packages, by being used to complete rapid transactions and every other thing that makes it a good catch. Solana might seem a bit obscure at the moment, but it is certainly one of the best to look out for.

  • Chainlink (LINK)

More accessibility means more acceptance, right? Chain-link is that cryptocurrency that’s relatively available to most people. It’s inexpensive and a good store of value as well. This is one of the reasons that attracts many investors to it. If you are looking to invest in a cryptocurrency in this context, this is one of the coins that can help build your financial portfolio in the long run. 

  • Cardano (ADA)

It is observed that the Cardano network holds a somewhat appealing impression for myriads of reasons. It consumes far less energy which then translates to a faster transaction rate. Also, it proves to be secure and it is one blockchain network that is quite keen on developing its systems.

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Bitcoin in Africa

ICE3X, One Of South Africa’s Oldest Crypto Exchange Cease Operations

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ICE3X

ICE3X, one of the first and oldest crypto exchanges in South Africa and across Africa which was founded in the year 2013 with roughly 80,000 clients ceased operations permanently due to low liquidity.

Earlier this year, ICE3X announced that they noticed some discrepancies in the balances pertaining to Bitcoin and Litecoin held on the platform on March 16. After several consultations and deliberations with their partner Merkeleon.com and subsidiary Coinspaid.com, no satisfactory conclusion was reached.

But on the advice of their auditing and legal team, ICE3X suspended deposits and trading of cryptocurrencies on their platform. In addition, Bitcoin (BTC) and Litecoin (LTC) withdrawals were also suspended pending the outcome of a full investigation and reconciliation.

ICE3X said that clients holding cryptocurrencies on their platform excluding Bitcoin (BTC) and Litecoin (LTC) will be able to withdraw their funds. They further said that this was done in protection of their clients.

On March 23, withdrawals from ICE3X platform by clients were totally disabled, and it was announced that withdrawals would now be done manually – clients would have to submit their withdrawals request via a Google Form.

The homepage URL of ICE3X which is ice3.com. Users will now be redirected to https://ice3x.co.za/status-update/ with no withdrawals support for Bitcoin (BTC) and Litecoin (LTC) yet, but clients were advised to place their withdrawals request for both.

On April 6, according to the website of 1CE3X, the South African Crypto Exchange will not be returning back to operations and advised to start their liquidation proceedings. Also, there are no longer withdrawal requests pending for any currencies except Bitcoin (BTC) and Litecoin (LTC).

At the point of writing this article, the latest update from ICE3X, shows that all withdrawal requests submitted up to April 6 have been rectified and all the remaining assets either cryptocurrencies or fiat are held in trust by Manong Badenhorst & Badenhorst Attorneys. Also, liquidation proceedings have been initiated and clients are advised to download the requisition form, which should be sent as a mail to avj@natliq.co.za.

Recently, Binance announced that ZAR trading pairs was delisted from their platform, according to the official Twitter handle of Binance Africa on March 31. It was recommended that users either trade out of their ZAR positions or withdraw all their ZAR balances before April 2, 10:00 AM (UTC). The affected trading pairs are USDT/ZAR, BTC/ZAR, ETH/ZAR, BUSD/ZAR, BNB/ZAR.

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