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Some analysts and ordinary people have claimed that Bitcoin and other cryptocurrencies are a bubble waiting to explode. A lot has been said about these digital assets, but what cannot be denied is their rising gross value. Bitcoin, in particular, has continued to surprise us by registering high prices against the USD. The price chart of cryptocurrencies is not the normal kind of chart you would expect to find. It will surprise and leave you asking questions about their meteoric rise.
The gross value of Bitcoin has exponentially risen over a relatively short period of time. This rise has been due to a number of reasons. However, it has also caused other cryptocurrencies such as Ethereum and Litecoin to register the same high price increases, albeit at a lower scale. The total market capitalization of cryptocurrencies was just below $1.6 billion on the 28th of April, 2013. The figure rose to over $834 (almost $835) billion on the 7th of January, 2018. This is the highest market capitalization figure ever reached.
Image source: https://coinmarketcap.com
Mike Novogratz, one of the billionaires who invested in cryptocurrencies had predicted that the cryptocurrency market capitalization has the potential to reach $2 trillion before 2018 comes to a close. Several analysts and traders believe that cryptocurrencies will be bullish as the year progresses. Some others have predicted that the overall crypto market capitalization will reach [at least] $1 trillion. This figure seems more realistic and achievable. The market cap of the top five cryptocurrencies, as of March 16th, stood around:
1. Bitcoin (BTC): $136,829,376,613
2. Ethereum (ETH): $58,797,909,057
3. Ripple (XRP): $27,111,121,789
4. Bitcoin Cash (BCH): $15,477,398,136
5. Litecoin (LTC): $8,972,615,192
And that’s only the top five, each impressive in their own right. There are over 1,500 digital currency tokens out there (1,564 as of the above date mentioned), and their total market cap combined, from the same day as the prices above, is an astounding $328,764,854,521! Mind you, this is after a huge slump in the market over the last few months… it was much higher! You can see all of the cryptocurrencies and their market caps at coinmarketcap.com.
Cryptocurrencies Are Not The Only Assets Around
It is quite difficult to say that cryptocurrencies are performing well or not if we do not compare them with other random assets. We will pick 10 random assets and see how they have been performing over the years.
The price of gold is currently around $1,323.50 oz. The price of gold could go down or up based on economic stability or political uncertainty, good or bad news, a strong or weak US dollar, etc. – gold usually has an inverse relationship with the strength of the USD. The COMEX has witnessed an increase in gold trading volumes. This comes from more investors wanting to buy rather than sell. Gold prices will be bullish if this trend continues.
Silver’s current price is around $16.62 oz. Some analysts expect silver to be bullish as the precious metal is (also) used industrially. It is also often used in the manufacturing of smartphones, automobiles, and the solar industry. There are some analysts who believe that silver will close the year at an average price of $20.60. There are others who say that the price of silver has long been superficially suppressed, and that various factors should actually demand a much higher price.
The price for platinum fell in 2017 due to low demand by the auto industry. There are brighter prospects for 2018 as the demand for the precious metal is set to increase. The overall demand for platinum is expected to grow by 2%. The supply of platinum is expected to fall. Platinum’s price per ounce is currently around $969.75 per ounce.
The titanium market, in the form of titanium dioxide, is expected to grow to over $14 billion in 2021 from a figure of $10.64 billion in 2016. The growth of titanium is expected to be catalyzed by the demand for titanium dioxide in the automobile and construction industries. Titanium is expensive despite its high abundance. The price of titanium per metric ton is shown below.
Price of titanium per metric ton over the years
The price of copper is between $2.40 and $2.70 per pound depending on the quality. Its price is forecasted to grow to between $3 and $4. Copper will likely be bullish due to its demand in China. Pan Pacific Copper claims that there might be a shortage of refined copper in 2018. This will likely increase copper prices which grew steadily in 2017. The demand for copper is likely to change a little in 2018.
The price of aluminum dropped by 30% between 2011 and 2015. The decline was due to reduced production costs. The price of the metal will depend largely on oversupply. The Chinese government recently shut down illegal aluminum mining operations. Chinese have to find new green-technology ways of powering up their plants. The shortage of energy and need for new environment-friendly means of producing aluminum should result in price increases. The price of aluminum per metric ton is currently around $2,091 (as of March 12th, 2018). It is worth noting that when aluminum was discovered, it was worth much more, but as it became easier to make, its price dropped dramatically.
The price of lithium has doubled in the last two years due to a high demand. The demand is largely due to Lithium’s use in electric cars. Lithium is much used by Tesla and is estimated that a single Tesla car requires more lithium than 10,000 smartphones. Some analysts have pointed out that there will be an excess supply of lithium after 2018. Morgan Stanley predicts that lithium will fall by 45% in 2021. This predicted drop is due to the expansion of lithium production in Chile. Morgan Stanley estimates the price of lithium carbonate to decline from $13,375 to just over $7,300 a ton in 2021.
Brent crude oil currently costs around $65.03 a barrel while WTI currently costs around $61.27 a barrel (as of March 16th, 2018). Oil prices are expected to grow due to global economic growth. Sub-Saharan Africa GDP is expected to grow and this favors the increase in oil prices. The amount of oil that the US will produce will have an impact on the price of oil. A reduction in US oil inventory will result in the prices going up.
There is a consensus among top investors that bonds will be bearish due to the tax cuts announced by the U.S. government. The trimming of a portfolio of bonds worth $4.4 trillion by the Federal Reserve does not look attractive to bond investors. However, the bearish bond market should not be severe.
The stock market had a successful year in 2017. While there are fears by some that the market may crash, Wall Street thinks otherwise. Stocks are expected to grow slowly towards the end of the year while volatility may creep in next year. Analysts are predicting different margins in stock increases and there are no suggestions of big declines in stock prices.
The Future Of Cryptocurrencies
Cryptocurrencies should likely be around for some time to come. Many observers and analysts have been skeptical about them since their earliest days, but they have continued to break and set new records. The prices of cryptocurrencies can decline sharply, but it shouldn’t be long before they correct again. The future of cryptocurrencies seems to be secured by the fact that more people are turning their attention to them. The fact that governments are starting to regulate them, and even creating their own, shows that they are on their way to becoming mainstream.