Bitcoin - Debunking the myth
Updated
Day after day, we tell ourselves that bullish market forecasts are getting increasingly ridiculous. Unfortunately, however, every bounce up in the market seems to produce more irrational thoughts among market participants. We often encounter statements about Bitcoin being headed to 100k USD, 200k USD, 500k USD, or even much higher. The same applies to other cryptocurrencies. Indeed, people have been writing us and predicting new all-time highs for Ethereum and Bitcoin, four-digit valuation for XRP, and other things we consider outright stupid in the current environment.
However, how do these valuations hold in the bigger scheme of things? People making outlandish calls do not seem to bother about this question. Therefore, we decided to answer it today. Based upon the data from the World Federation of Exchanges (which encompasses all significant stock market exchanges with over 58 000 companies), the equity market capitalization stands at 122.94 trillion USD.
The current market cap of all cryptocurrencies is slightly above 1 trillion USD; at its peak, the market cap stood at 3.009 trillion USD. The current supply of Bitcoin is about 19 147 400 units. Meanwhile, the supply for Ethereum is approximately 122 323 191 units, and for XRP, about 49 826 021 773 units.
Now, let's put in perspective the current valuation and cryptocurrency supply.
BTC - approximate units = 19 147 400
ETH - approximate units = 122 323 191
XRP - approximate units = 49 826 021 773
BTC - the (approximate) current market cap = 411 bn. USD
ETH - the (approximate) current market cap = 214 bn. USD
XRP - the (approximate) current market cap= 17.6 bn. USD
Altogether, these three cryptocurrencies account for more than 50% of the (whole) cryptocurrency market cap. However, what would be the value of their market cap if predictions about sky-high valuations were due to become real?
BTC at 100 000 USD = 19 147 400 x 100 000 = 1.91 trn. USD
BTC at 200 000 USD = 19 147 400 x 200 000 = 3.82 trn. USD
BTC at 500 000 USD = 19 147 400 x 500 000 = 9.57 trn. USD
ETH at 10 000 USD = 122 323 191 x 10 000 = 1.22 trn. USD
ETH at 20 000 USD = 122 323 191 x 20 000 = 2.44 trn. USD
XRP at 100 USD = 49 826 021 773 x 100 = 4.98 trn. USD
XRP at 1000 USD = 49 826 021 773 x 1000 = 49.8 trn. USD
After the calculation, it is evident that at 500k USD for Bitcoin, the whole market cap would be higher by over 8 trillion USD (when taking into account just increase in BTC). That is about an 800% increase for the entire cryptocurrency market (not taking into account an increase of other 20 000 cryptocurrencies). With Ethereum at 10 000 USD, the market cap would grow by another 1 trillion USD, which is again not a tiny number; additionally, the 20 000 price tag would double that figure. Finally, in the case of XRP at 100 USD, the market cap (just for XRP) would be valued at 4.98 trillion USD (which is already multiple times higher than the current market cap of BTC). At 1000 USD, the XRP market cap would be approximately 49.8 trillion USD.
It does not take much common sense to realize these valuations are immense, especially when compared to the global equity market capitalization based on the World Federation of Exchanges data. In our opinion, these and many similar predictions about cryptocurrencies reversing to the uptrend and continuing higher are doomed to fail. Our views are based on fundamental and technical factors described in previous and attached articles. Accordingly, we remain bearish on Bitcoin and stick to our price targets at 17 500 USD and 15 000 USD.
Illustration 1.01
The picture shows the total market cap of cryptocurrencies and its decline of 66% from ATH.
Technical analysis - daily time frame
RSI and Stochastic are bullish. However, they are getting overvalued very quickly. MACD is neutral. DM+ and DM- are bullish. Overall, the daily time frame is neutral/slightly bullish.
Illustration 1.02
Illustration 1.02 shows simple support and resistance levels for BTCUSD. The breakout above the immediate resistance will bolster the bullish case for BTC in the short-term. However, we stick to our bearish outlook beyond that.
Technical analysis - weekly time frame
RSI, Stochastic, and MACD are neutral/slightly bullish. DM+ and DM- stay bearish. Overall, the weekly time frame is neutral.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
However, how do these valuations hold in the bigger scheme of things? People making outlandish calls do not seem to bother about this question. Therefore, we decided to answer it today. Based upon the data from the World Federation of Exchanges (which encompasses all significant stock market exchanges with over 58 000 companies), the equity market capitalization stands at 122.94 trillion USD.
The current market cap of all cryptocurrencies is slightly above 1 trillion USD; at its peak, the market cap stood at 3.009 trillion USD. The current supply of Bitcoin is about 19 147 400 units. Meanwhile, the supply for Ethereum is approximately 122 323 191 units, and for XRP, about 49 826 021 773 units.
Now, let's put in perspective the current valuation and cryptocurrency supply.
BTC - approximate units = 19 147 400
ETH - approximate units = 122 323 191
XRP - approximate units = 49 826 021 773
BTC - the (approximate) current market cap = 411 bn. USD
ETH - the (approximate) current market cap = 214 bn. USD
XRP - the (approximate) current market cap= 17.6 bn. USD
Altogether, these three cryptocurrencies account for more than 50% of the (whole) cryptocurrency market cap. However, what would be the value of their market cap if predictions about sky-high valuations were due to become real?
BTC at 100 000 USD = 19 147 400 x 100 000 = 1.91 trn. USD
BTC at 200 000 USD = 19 147 400 x 200 000 = 3.82 trn. USD
BTC at 500 000 USD = 19 147 400 x 500 000 = 9.57 trn. USD
ETH at 10 000 USD = 122 323 191 x 10 000 = 1.22 trn. USD
ETH at 20 000 USD = 122 323 191 x 20 000 = 2.44 trn. USD
XRP at 100 USD = 49 826 021 773 x 100 = 4.98 trn. USD
XRP at 1000 USD = 49 826 021 773 x 1000 = 49.8 trn. USD
After the calculation, it is evident that at 500k USD for Bitcoin, the whole market cap would be higher by over 8 trillion USD (when taking into account just increase in BTC). That is about an 800% increase for the entire cryptocurrency market (not taking into account an increase of other 20 000 cryptocurrencies). With Ethereum at 10 000 USD, the market cap would grow by another 1 trillion USD, which is again not a tiny number; additionally, the 20 000 price tag would double that figure. Finally, in the case of XRP at 100 USD, the market cap (just for XRP) would be valued at 4.98 trillion USD (which is already multiple times higher than the current market cap of BTC). At 1000 USD, the XRP market cap would be approximately 49.8 trillion USD.
It does not take much common sense to realize these valuations are immense, especially when compared to the global equity market capitalization based on the World Federation of Exchanges data. In our opinion, these and many similar predictions about cryptocurrencies reversing to the uptrend and continuing higher are doomed to fail. Our views are based on fundamental and technical factors described in previous and attached articles. Accordingly, we remain bearish on Bitcoin and stick to our price targets at 17 500 USD and 15 000 USD.
Illustration 1.01
The picture shows the total market cap of cryptocurrencies and its decline of 66% from ATH.
Technical analysis - daily time frame
RSI and Stochastic are bullish. However, they are getting overvalued very quickly. MACD is neutral. DM+ and DM- are bullish. Overall, the daily time frame is neutral/slightly bullish.
Illustration 1.02
Illustration 1.02 shows simple support and resistance levels for BTCUSD. The breakout above the immediate resistance will bolster the bullish case for BTC in the short-term. However, we stick to our bearish outlook beyond that.
Technical analysis - weekly time frame
RSI, Stochastic, and MACD are neutral/slightly bullish. DM+ and DM- stay bearish. Overall, the weekly time frame is neutral.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
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