Cryptocurrency Market Cap Passes $1 Trillion USD

18.01.21 01:06 AM By Stormrake

The Rake Review January 2021

Welcome to the Stormrake Monthly Australian crypto market & education update.
For sophisticated investors who want to expand their crypto knowledge.

1 Trillion Dollars

We were looking forward to 2021 as the year Bitcoin goes institutional and January did not disappoint.

Bitcoin hit All-Time Highs in December of just under $30,000 USD and January saw new All-Time Highs multiple days and a new price above $42,000 USD.

The total market cap of all Crypto-Currencies passed 1 Trillion Dollars for the first time.

Let's put that in context though. How does that compare to Gold, Silver and of course fiat currencies.

GOLD

$10.4 Trillion

Gold's Market Cap is North of $10 Trillion although no one knows that exactly because there is no blockchain for it. Gold reserves are still plentiful and the only thing stopping form miners pulling it out of the ground is the cost of mining. Bitcoin also has a large cost to mining through computer power and energy however we know exactly how much Bitcoin is left to mine and its only 10% of total supply - EVER. Anthony Pompliano thinks Bitcoin will pass Gold's market cap within a decade although I dare say he may be a bit more bullish given recent price action. Gold is currently 16 times larger than the Bitcoin market cap.

SILVER

$0.8 Trillion

Silver's Market cap was almost passed by Bitcoin this month. Will Bitcoin pass it this year?

FIAT Currencies

$115 Trillion

If Bitcoin were a Fiat Currency it would be ranked 22 by size. The Russian Rouble is currently worth more than Bitcoin. I think that's a pretty good sign Bitcoin might still be undervalued despite a good 3 months of growth. The Chinese Yuan is actually worth more in total than any other currency which is insane to me. All of these currencies are not backed by anything and there is no supply ceiling. That's why holders of these currencies lose value every single year.

Here is a list of the top 13 as valued in BTC:

* fiatmarketcap.com

Let's get into the report:

This month's Video

This month we'd like to share with you a great explanation from Robert Kiyosaki, author of "Rich Dad, Poor Dad". It is a light hearted easy viewing and we hope you enjoy.

Markets

Bitcoin has taken a weeklong breather after a stellar 3 months of record breaking growth currently trading around $36,000 USD. Litecoin and XRP (Legal Issues) are the big losers dropping to 7th and 5th. DOT has doubled in a week to go into 4th spot behind USDt and Cardano (ADA) has moved into 6th after being outside the top 10 recently due to speculation over coming network upgrades.

* Top 8 Coins by Market Cap thanks to Coin Gecko

In the NEWS

1. $1.9T USD more stimulus

President Joe Biden has unveiled a $1.9T USD stimulus package to prop up the US economy as they struggle through the impacts of Covid-19. If you haven't watched our video of the month yet, I recommend you do and think about this in relation to this money printing.

2. Coinbase Issues

Willy Woo's analysis below of Bitcoin's pull back after going above $40,000 USD reveal that Coinbase technical issues may have started a chain reaction and pulled the whole market down. Deciding how to accurately reflect the "true" price of Bitcoin for futures contracts is not an easy problem.

3. Ripple hits the brakes

Ripple started December with a bang becoming the 3rd largest crypto-currency and pumping from its 30c US support level to above 70c US. Then news came out that the SEC would be suing Ripple (The company) including the founders for selling an unregistered security. The company will fight the charges, but Ripple holders didn't waste any time selling the currency all the way back to 20c. Remember XRP was over $3 during the 2017 boom. We have always said that Bitcoin is where money should be stored not Ripple which is not decentralised and has a huge supply. XRP has recovered somewhat to 28c US.

4. USDT FUD (Fear - Uncertainty and Doubt)

USDT, more commonly known as "Tether" is a stablecoin that is in theory, backed 1:1 to USD. Tether is unloved by Bitcoin Maximalist and seen as part of the problem instead of the solution. Recently an article discussed that Bitcoin may be vulnerable if USDT fails. The article misses the mark in our opinion and needlessly conflates USDT issues with Bitcoin's performance. Bitcoin is not responsible for USDT just like it is not responsible for USD. Bitcoin was being purchased prior to USDt's existence and will continue to be purchased in its absence. We have retweeted David Fauchier who's made a good thread explaining this and the link is in the headline.

Ethereum Staking & Supply Issues

Ethereum on centralised exchanges has plunged with reports of holdings dropping over 25% in 48hrs.

This suggests people are buying ETH and moving to Cold storage (Holders) or even Staking directly on ETH.

As we have written about ETH is moving to Proof of Stake and Staking is now available. Staking locks up your ETH until it moves to ETH2.0. This means it cannot be sold in that time.

At the time of writing this there was already more than 2.5 Million ETH staked which is 2.5% of supply roughly (3 Billion dollars' worth). over 200 ETH per minute are going into the staking contract. That rate is accelerating at the moment and reducing available supply meaning a round of buying momentum could break resistance and shoot the price of ETH through the roof. Do not be caught short here.....

Bitcoin Dashboard

This month we again focus on just one part of the Dashboard.

Transaction Fees

Fees vary on the Bitcoin network as they do with the ETH network and others. Why is that? Well, it is a free market with supply and demand. A sender wants to send their Bitcoin as fast as possible but at the same time wants to spend as little as possible doing it. There are many senders and so they all compete to get into the next block. Blocks happen roughly every 10 minutes and there is limited space. If a block doesn't have enough room for all the transactions the ones that are willing to pay the highest price go first. That's the basics of the market.

If you want your transaction confirmed quickly you need to pay a little extra than the going rate and you will get a good result. If you don't care about speed but instead want cheap cost you can select a lower fee and you will get your transaction confirmed once demand/ traffic decreases. This way a market price of fees is reached and everyone gets their preference. If there was a fixed fee the system would occasionally come to a standstill when demand is high and sometimes charge too much when demand is low.

The dash below tracks current system fees. 83 sats/byte (approx $10 AUD) gives you an immediate transaction (current block) whereas you can pay as little as 2 sats/byte (approx 25c) but you may wait a week to have your transaction dealt with. You don't have that kind of flexibility at a bank when you send money to someone overseas. In fact you can't even track the transaction and you won't know if its successful for days even though you pay exorbitant fees.

Still too much or too slow? No problem - There solutions that work on top of Bitcoin, such as Lightning and Liquid, that allow transfer of Bitcoin faster and cheaper!

In times of market boom, especially when people are desperate for quick transactions, fees can skyrocket ala surge pricing on Uber. ETH 2.0 is trying to lower fees for ETH users significantly.

Stock to Flow Valuation:

Current Long-Term Stock to Flow (STF) Price: $27,828 USD vs Current Price - $36,000 USD. Market price is now higher than the historical trend suggesting that Bitcoin is overvalued today. However, the STF model also shows an increasing price every day for the next year to $103,000 USD. According to the efficient markets hypothesis, a rational investor would buy today and wait for the $103,000 USD price to materialise if you trusted the model. That’s why we rate Bitcoin as a BUY

Plan B has stated that this year will make or break his model and it seems the model is holding true!

Monthly Memes

Until next month, Happy Investing!

Stormrake Team

custody@stormrake.com

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