A Major Spike:
On April 1, 2017, the total market cap for all cryptocurrencies was slightly higher than $25 billion. Roughly two months later, the cap exceeded $100 billion. In just over 60 days, the value of cryptocurrencies surged by 300 percent. So what was the real reason behind this major spike??
The leading cryptocurrency, Bitcoin, recently made headlinesÂ by climbing dramatically in value (itâ€™s currently sitting around $2,500 USD, about 160 percent higher than its value in April). But Bitcoin hasnâ€™t been alone in this extreme growth. The cryptocurrency market as a whole has spiked in value within the last few months.
While those already invested in Bitcoin might be celebrating, this jump is clearly reasoned to pause for anyone considering entering the market. Historically, what goes up super-fast must come down â€” at least when it comes to the stock market. This has prompted many to call this rise a bubble, leaving investors to wonder when it will burst.
An Upward Trend:
Whether due to historical precedent, a monopoly on investment, or simply an easily swayed investor pool, it seems pretty likely that this recent rise of cryptocurrencies will lead to some sort of drop. However, that doesnâ€™t mean cryptocurrencies donâ€™t have the potential to be a major player, if not the only player, in the future of finance.
One positive development is the increasing diversity of cryptocurrencies. While Bitcoin was long the definitive leader in the market, holding roughly 80 percent of the total market cap, others such asÂ EthereumÂ are making major gains, knocking Bitcoin down toÂ just about 50 percent. Therefore, this gives reassurance as,Â these gains have come from currencies other than Bitcoin and it is a good sign that this is less of a bubble and more of a resurgence of interest in crypto. Blockchain, the technology supporting these digital currencies, may be even more worthy of the investment than the cryptocurrencies themselves.
The link between digital currencies and this super-secureÂ distributed database lends further support to the argument that digital currencies are a sound investment. However, only time will tell whether this current period of rapid growth will slow, plateau, drop, or continue skyward.
As with any investment, the potential for reward comes with its share of risks, but right now, the future looks pretty bright for cryptocurrency.
Visit Finlaw.in or call +91-9820907711 to know more about cryptocurrenciesÂ and setting up an Bitcoin Exchange.