by Marco Rossi
The ‘twisted’ trends we discussed last week are still on in the market.
Silver is growing, together with Platinum, historically ‘left-over’ metals, while the ruling Gold and Palladium are seeing a growing competition in what was their market only a few months ago.
At the same time, in the alternative ‘market wanna-be’ of cryptos we find a similar complex system, with altcoins increasingly convincing investors and analysts that their season might come soon.
Sure, it is still a long way, but it’s only been a month that Silver caught up with Gold and that bigger cryptos as ETH, LTC, and XRP are starting to seriously have a say in the market cap. And it looks like they won’t give up easily.
Investing in crypto has shown to work better if seen in logarithmic terms, rather than linear. This means that the probability of being down 50% or up 100% is far greater than in any other asset classes.
The so-called ‘alt-market’, the alternative market to Bitcoin, have a good chance to triple-digit their percentage gains.
If we are to see a sustainable industry, this would be the starting point.
Let’s give a look at these charts to make things clearer:
Starting from September 9, 2016 and going all the way through Sept 9, 2019 the CMC index in linear terms.
From a chart like this we can see how incredible has been the rise of the cap from point 1 to point 2, namely a 64-fold return from nearly $12bn to $787bn. This means that assets valued $15,625 in Sept 2016, in Jan 2018 were worth $1ml!
However, we should also be aware that in linear terms a one-dollar increase is a one-dollar increase no matter what. But we know well that moving something from $1 to $1.01 is easy, while going from $0.1 to $1.01 is a bit of a pickle.
Here, then, is a log chart:
Note how the curve is less steep. Still, there has been an increase. Investors who bought back in Sept 2016 have witnessed an increase of 2,200% in the value of their assets.
But the picture, in log terms, is way clearer.
Unfortunately, as usual, the charts of the cap in linear and log terms without BTC show similar rates, since it has been BTC to have brought the entire market up.
The five assets in the Bitcoin family — BTC, BCH, BSV, BCD, and BTG — still hold a market cap of $193.1bn. While the total cap is $265bn, according to CoinMarketCap.
While ETH, LTC, and XRP have a combined cap of $35.1bn. If we add these ‘big 3’ to the Bitcoin family we have a total cap of $228.2bn, accounting for 86.4% of the total market cap.
Moreover, let’s remember that BTC accounts for 91% of the actual price movement.
If just 10% of the BTC capital flowed into the remaining cap — that is what is left besides the BTC family and the ‘big 3’ — we would then see $19.3bn moving into a class worth $37bn.
(Thinking even bigger: the all-time low of Bitcoin was 32% of the total cap. In today’s terms, that’d be a flow of $131bn!)
However, it is also true that it was Gold to have brought the precious metal market up for all this time. These days, however, it has been contested by largely ‘underrated’ metals.
Seen in terms of complex structures moving within a larger market flow, the cryptomarket could show the same characteristics in the months to come.
Savvy investors have already spotted this trend. Interesting days are coming ahead.