Bitcoin’s Road to $10,000 Outshines Libra as Crypto Market Cap Crosses $300 Billion
It was a week of major milestones for the cryptocurrency market, as Facebook debuted its Libra blockchain, bitcoin (BTC) came within striking distance of $10,000 and the digital currency market cap crossed $300 billion for the first time since July. Crypto markets have now recovered 200% from their December low and bitcoin is down only half from its record high.
Bitcoin has emerged as the clear winner in the latest bout of crypto euphoria, with the leading digital current now accounting for roughly 58% of the total market capitalization. Several forces have underpinned bitcoin’s bullish revival from smart money accumulation to the upcoming halving event scheduled for next July. Perhaps ironically, $10,000 bitcoin could be the signal that retail traders are looking for to drive the next buying frenzy. The fear of missing out (FOMO) means more traders are willing to buy BTC above $10,000 than below $10,000. Yes, really.
Bitcoin Approaches $10,000
At the time of writing Friday morning, bitcoin was eyeing weekly returns of 18.1%, according to CoinMarketCap. The largest and most influential cryptocurrency peaked at $9,878.15 on Bitstamp, having gained more than 6% over the 24-hour trading cycle.
With the gain, bitcoin’s market cap has swelled past $175 billion for the first time since March 2018. As a reminder: bitcoin’s market cap plunged below $55 billion in December.
The consensus among analysts is that $10,000 bitcoin is the next major FOMO level. If and when the price crosses this critical threshold, an immediate push to the $15,000 region is expected.
Blockchain investor Tyler Winklevoss, reiterated that point in a Wednesday tweet:
If bitcoin breaks 10k, you can bet it’s going to break 15k…👍🏻🚀
— Tyler Winklevoss (@tylerwinklevoss) June 19, 2019
Bitcoin’s price is up more than 210% from its December low. Year-to-date, the cryptocurrency has rallied 162%.
The Tether Factor
For all the euphoria surrounding bitcoin, one thing is clear: BTC’s momentous rally is occurring virtually in lockstep with a sharp rise in Tether’s circulating supply. Tether, or USDT for short, has seen its market cap surge over the past three months. And as we know, USDT is the quote currency on a huge portion of bitcoin trades.
Tether’s market cap has swelled to $3.6 billion, an 80% jump since February. As Hacked reported earlier this week, bitcoin’s price usually reflects Tether’s market size. In other words, when Tether’s market cap goes up, bitcoin’s usually follows.
USDT had a reported turnover of $20.2 billion on Friday, according to CoinMarketCap. Its the second-most actively traded cryptocurrency behind bitcoin.
Crypto Markets Cross $300 Billion
Bitcoin’s gravitational pull on the broader market was apparent this week, as most major assets reported sizable gains. In addition to BTC, Monero (XMR), Ethereum (ETH) and XRP all reported double-digit returns.
The total cryptocurrency market capitalization peaked near $304 billion on Friday, the highest since May 2018. Week-over-week, the market cap rose by nearly $40 billion.
If bitcoin crosses $10,000, the crypto market cap could be headed a lot higher in the short term. However, expectations of another altcoin season have been put on hold for now as bitcoin continues to attract higher capital flows. One asset investors should be monitoring is Ethereum; the developer coin’s catch-up game could have major implications on the next bull rally. Read more: Ethereum’s Catch-Up Game Could Spark the Next Major Crypto Rally.
Facebook’s Libra is No Bitcoin Killer
After much speculation, Facebook on Tuesday unveiled the details of its highly-anticipated Libra blockchain. In a lengthy whitepaper, the social media company described the vision and technical specifications of a cryptocurrency that will boost financial inclusion across a vast network of billions of users.
“The goal of the Libra Blockchain is to serve as a solid foundation for financial services, including a new global currency, which could meet the daily financial needs of billions of people,” the whitepaper reads.
Libra has divided the cryptocurrency community. On the one hand, it has no semblance to the public, permissionless and censorship-resistant blockchains (i.e. bitcoin) that have transformed our understanding of money and value creation. On the other hand, Libra could compete against retail banks and force a radical re-thinking of the role of cryptocurrencies in modern society. The latter has many crypto enthusiasts excited about the value that Libra could bring to the digital currency ecosystem.
Week Ahead and Things to Consider
Bitcoin’s bull market could be just getting started. Institutional adoption, an upcoming supply shock and new rounds of central-bank stimulus could boost bitcoin’s value as a store-of-value asset. With Bakkt set to trial physical bitcoin futures next month, mainstream coverage of BTC will likely grow in the immediate future.
To be clear: bitcoin marches to the beat of its own drum, so it’s not entirely clear how things like monetary policy and global economic health will impact its performance. That being said, the Federal Reserve’s capitulation on monetary policy will allow bitcoin investors to test one of their favorite hypotheses: that excessive money printing and runaway inflation will hasten adoption of the leading cryptocurrency. Only time will tell.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Charts via TradingView and CoinMarketCap.