This week, for the first time,
the market capitalization of cryptocurrencies reached about the $30 billion point. While the cryptocurrency industry has been booming for some time, this marks an important milestone for the relatively new area. It also reveals that cryptocurrencies are growing quickly, and the pace at which they are growing seems to be increasing as well. Analysts are now looking to this growth in comparison with the first run-up in price that cryptocurrencies enjoyed in 2013. While that turned out to be a bubble, there is reason to think that this time around things may be on more solid footing.
In late 2013, after cryptocurrencies saw their market capitalization climb to roughly $15 billion, the bubble popped. However, there were several factors that were unique to that particular moment in cryptocurrency development and which seem to be irrelevant at this time. First, at that point in time, Bitcoin was the overwhelmingly dominant name in the cryptocurrency game, comprising more than 95% of the market, according to reporting by Bitcoinist. What's more, Bitcoin exchange was done almost exclusively at that time on the Mt. Gox platform, which was destined to meet its end. Without Mt. Gox, Bitcoin users floundered when it came to transactions, and the market suffered significantly. In the time since the collapse, the cryptocurrency market has been gradually reclaiming lost ground. That is, until the beginning of this year; since the start of 2017, cryptocurrencies have skyrocketed.
Cryptocurrency Market in 2017
Now, Bitcoin is no longer the single dominant force in the cryptocurrency market. While it still occupies just under 70% of the market, there is increasing room for other players, including Ethereum, Monero, and Dash. These last names are outperforming Bitcoin so far in 2017, with Dash and Ethereum gaining 600% and 550% so far this year, respectively.
Analysts have suggested that some of these cryptocurrencies are likely to ultimately falter. Nonetheless, the stability that comes for the market when the products are more diverse in this way is key to the long-term health of cryptocurrencies as a class. Also important to this stability is the increasing number of exchanges, wallet services, and other secondary cryptocurrency products. This means that cryptocurrency holders will no longer be so heavily dependent upon a single service. The process of decentralisation seems to also have been beneficial to the systemic risk that individual cryptocurrency holders maintain as well.
What is next for cryptocurrencies? Erik Voorhees, CEO of cryptocurrency conversion company Shapeshift, expects that the market cap will reach $300 billion by 2021. Different investors are pointing to various currencies and products as the next big thing, but the notion that there will, indeed, be a next big thing at all is generally taken as a given.