Crypto market cap reaches $2 trillion as whales show patience pays off
It only took 3 months for the entire cryptocurrency market to make its way back up to a high level of capitalization, which demonstrates that the entire cryptocurrency ecosystem is very robust and can handle influencer-driven flash crashes.
Not only can it handle Elon Musk’s self-serving stress test, but what has been clear since that fateful day in May this year when almost $1 trillion was wiped from the value of five cryptocurrencies is that, rather unlike other investments or tradable instruments, when cryptocurrency makes an unprecedented move downwards for an unprecedented reason, it attracts people who have never been involved in cryptocurrency before as they see it as an opportunity.
This happened en masse back in May, in the digital asset equivalent of the gold rush. A large number of analytical, edcuated people moved into cryptocurrency when it was down, calmly under the impression that it would go up again.
And they were right. Today, the combined cryptocurrency market has edged near to the $2 trillion capitalization mark, showing a complete recovery in that it is almost at its pre-Elon Musk value.
Analysts at some of the large financial data companies have stated today that it is possible that the upward turn in values may have been even higher if it had not been for the current discussions in the US Senate about taxation rulings and possible regulation, but that is the wrong way of looking at it.
The market, and the wider fintech industry has responded very well to the potential regulations that may come about in the US, and has also responded well to the current discussions on tax treatment. These moves are being viewed quite rightly as a step toward a more comprehensive framework for cryptocurrency use not just as a tradeable asset and a currency, but as a major component system in various parts of the financial services world of the future, enabling transparent, well organized infrastructure for decentralized payments, trading, exchange services and smart contracts.
It would also create a clear pavement for future developments, as the use scenarios for blockchain-related projects is potentially limitless, therefore with a major region of importance such as the US bringing in a fully comprehensive system for regulation and tax treatment, those in the know would likely envisage a very bright future for all things crypto.
One of the byproducts of the rising price of the major cryptocurrencies is that Bitcoin whales have begun to cash in.
Bitcoin in particular has been experiencing significant increases over the past three weeks, gaining 17,000 points in market value.
In reality, the price of Bitcoin has increased by 57% from a low of $29,800 on July. 21 to recently hitting a high of $46,800. Now, some of the very large scale investors who have been accumulating more Bitcoins over the past few months and biding their time, appear to have started booking profits.
Behavior analytics platform Santiment has shown today that addresses with 100 to 10,000 BTC have significantly reduced their holdings, and that in the last four days. these whales sold over 40,000 BTC, worth roughly $2.07 billion.
This is a clear case of shrewd investors having remained patient through a time of lower values, and used that period as an opportunity to accumulate more Bitcoin whilst the values were down. During the recent periods of increasing value, the general behavior of whales has been to hang onto their holdings, and then as of the recent rise to almost May levels, they have begun to sell.
Looking at this logically, this represents a clear case of mature investors knowing how to bide their time and see out volatility until it works in their favor.
A few investors and analysts look at the cryptocurrency trading market as one with some welcome degree of volatility, and that if more regulation is brought in, the volatility will likely slow a bit, but not go away completely.
This, therefore, is a driver of optimism that Bitcoin and other leading cryptocurrency assets will likely always be an interesting asset class to trade, due to their more fluctuating value than traditional assets, and with a regulated environment there would be greater controls and rules, but still enough freedom and decentralized goodness to be able to reap the rewards of the technological advantages and the market fluctation advantages.
Maturity, in this case, means equal levels of entrepreneurism and self-determination, but with a robust and capable crypto market now well proven.