We know Elon Musk supports Cryptocurrency, but what’s all the excitement about, and when will the Bitcoin balloon burst?
Just like the stock exchange, the cryptocurrency market is constantly subjected to intense price fluctuations – both upwards and downwards. Tesla recently buying $1.5 billion worth of Bitcoin is just one instance of how the crypto market can vary.
For example, from the middle of 2013 to the middle of 2014, during the end of 2017 to the beginning of 2018, and now again as we’ve noticed in the past few months, there have been several highs and lows of cryptocurrencies.
If we examine the fluctuation of cryptocurrencies across 52 weeks, it’s noticeable that the highest market capitalization is what we’ve observed in the past few weeks:
- Bitcoin: No.1 cryptocurrency by market capitalization has a 52-week high of US$58,330 and a 52-week low of US$4106 (which are a factor of 14.2 apart)
- Ethereum: No.2 by market capitalization has a 52-week high of US$2036 and a 52-week low of US$95 (factor of 21.4 apart)
- Cardano: No.3 by market capitalization has a 52-week high of US$1.48 and a 52-week low of US$0.01913 (factor of 77.4 apart)
(Data source: https://coinmarketcap.com, accessed on March 2, 2021.)
This level of variation within 52-week is rarely seen in the stock market, and it’s usually not something that’s happening once-off to one particular cryptocurrency; it’s happening often and to various cryptocurrencies.
Understanding the blockchain ecosystem
Over the past few years, blockchain technology has swiftly developed as more companies, developers and researchers begin to understand and adopt it.
In the first generation of blockchain programs, there were many restrictions to the high consumption of energy, scalability, unsatisfactory assistance of smart contracts, and so on.
Now, thousands of platforms and projects are assaying to enhance different aspects of blockchain technology, involving thousands of skillful engineers and hundreds of highly qualified researchers.
Leading global organizations assume blockchain solutions can have an enormous economic impact.
However, the accomplishment of this potential will depend on factors such as the development of new business models based on technology, the acceptance of blockchain solutions to the general population and by the industry, technological progress, and the legislation passed to control the blockchain space.
Linking back to the crypto market
There’s a probability the recent cryptocurrency price hikes are partially or justified by shifts in the market participants’ understanding of the factors influencing the prospects of blockchain platforms. Nevertheless, in the long run, the value of cryptocurrencies will depend on the financial added value generated by the blockchain ecosystem.
If we look back to the dot-com boom in the 1990s, there was tremendous growth in internet use, and it was admitted it would change the world. Thousands of net-related organizations appeared and began developing technologies, applications, and services.
A market bubble resulted due to excessive speculation, and in the crash, several corporations were forced to shut down.
But the internet, of course, turned out to indeed be revolutionary, and some of the corporations formed at that time are today among the world’s biggest giants.
If blockchain technology’s potential is realized, maybe many of the current blockchain projects and platforms won’t cut, drastically reducing in value or vanishing altogether.
But, there’s a right opportunity that some of them will be big winners.