Cryptocurrency continues its incredible surge, with the combined market capitalization of all digital currency reaching $500 bln. According to the Wayback Machine, on December 15, 2016 - almost exactly one year ago - the total market cap stood at around $15 bln. Today’s price movements bring the total return of the entire sector to about 3,333%, year-over-year. Virtually anybody who owned crypto a year ago, and still holds it, is a winner.

How far we’ve come

As of one year ago, the top ten digital currencies and their market caps were:

 

  1. Bitcoin, $12.5 bln

  2. Ethereum, $713 mln

  3. Ripple, $241 mln

  4. Litecoin, $177 mln

  5. Monero, $114 mln

  6. Ethereum Classic, $86 mln

  7. Dash, $64 mln

  8. Steem, $41 mln

  9. MaidSafeCoin, $37 mln

  10. Augur, $34 mln

Today, the list looks like:

  1. Bitcoin, $292.7 bln

  2. Ethereum, $58.8 bln

  3. Bitcoin Cash, $27.5 bln

  4. Litecoin, $18 bln

  5. Ripple, $14.6 bln

  6. IOTA, $12.8 bln

  7. Dash, $7 bln

  8. NEM, $5 bln

  9. Monero, $4.7 bln

  10. Bitcoin Gold, $4.6 bln

Last year, two of these currencies (Bitcoin Cash, Bitcoin Gold) didn’t even exist, and at least one (IOTA) was only traded over-the-counter at incredibly low prices. At that time, only the top five cryptocurrencies had breached the $100 mln market cap level; today the top 23 digital currencies have over $1 bln in market cap. To find a currency with “only” a $100 mln market cap, one must scroll down to number 90 on the list.

Bubble or S-curve?

Many pundits, particularly those from the world of “traditional finance,” believe that the digital currency market is in an epic bubble. Bitcoin-hater and JP Morgan Chase CEO Jamie Dimon also calls Bitcoin a bubble, but refuses to short the currency because he thinks it could go as high as $100,000. Global Chief Economist of Swiss Bank UBS recently wrote:

“The bubble to end all bubbles continues. Cryptocurrencies only have value if accepted as currencies. However, they cannot be used for the most important transaction in an economy, and cryptocurrency supply can only rise and never fall (making them a poor store of value).”

While digital currency may in fact be in a bubble, it’s worth remembering that past bubbles have often lasted for years and grown far larger than anybody expected. Dimon may well be right about his $100,000 Bitcoin prediction. In that case, before the bubble bursts, many of you who are reading this today will be millionaires - and some of you will be billionaires.

Yet there are signs that this may not be a bubble at all. Technology tends to follow a so-called “S-curve” where adoptions grows slowly at first, then increases exponentially in an almost vertical line, then flattens out again once mass adoption is reached. If digital currency adoption is in fact following an S-curve, then the massive crash many are expecting may never happen. While dips and spikes are expected, a jaw-dropping 80-90% correction may not come.