The total value of all cryptocurrencies was the first time on Wednesday $ 1 trillion per CoinGecko index of 6,124 assets. At its previous peak in late 2017, the total capitalization of the market was just over $ 760 billion, according to TradingView.
Bitcoin accounts for around 69% of market value, according to Messari.
Traders are not surprised by the increasing value of the market.
“Is it frothy? A little bit short term, ”said Qiao Wang, co-founder of DeFi Alliance accelerator company DeFi Alliance and former quantitative trader at Tower Research. “But is it ridiculous,” he asked rhetorically. “Nah.”
Over the past 12 months, the almost parabolic surge in Bitcoin and other cryptocurrencies has occurred as deeply pocketed institutional investors show growing interest in Bitcoin and a new group of retail investors follow suit and showcase some interesting alternative cryptocurrencies (Altcoins).
Bitcoin has already gained 25% in January after gaining more than 300% in 2020. Ethereum has also risen over the past 12 months, hitting an overall gain of around 860% on Wednesday after trading above $ 1,200 for the first time since early 2018.
“The $ 1 trillion mark cemented cryptocurrency as an investable asset class that is no longer on the fringes of traditional finance as a toy for private investors,” said Jack Purdy, decentralized financial analyst at Messari. “It shows that this asset class is big enough to take on large orders, as we recently saw at a large number of institutions that have come in over the past few months.”
Some of those big investments came from companies like tech firm MicroStrategy, which raised over 70,000 BTC with plans to buy, and London-based wealth manager Ruffer Investment, which invested $ 740 million in Bitcoin towards the end of 2020.
“Cryptocurrencies are now almost an institutional venture bet,” Wang told CoinDesk. “The market is finally liquid enough to bring in large amounts of capital, but still early enough for a 10x return.”
For some investors, those returns come from altcoins. As Bitcoin continues to climb above $ 30,000, altcoin indices have gained momentum.
In FTX’s markets, the top 10 altcoins index rose over 30% in 2021. The “Shitcoin” index, which shows altcoins with a microcap, also gained over 20% in January.
“A trillion dollar market cap is a huge milestone for crypto, especially considering it was below $ 200 billion less than a year ago,” said Nate Maddrey, research analyst at Coin Metrics, in a direct message to CoinDesk . “However, Crypto’s total market cap is still only a fraction of that of gold, stocks, and many other assets.”
From “Shitcoin” indexes to major assets like Bitcoin, institutional buyers and retail speculators can likely find something to spark interest in this re-shaped trillion dollar market.
“Crypto is in a unique position to be the premier asset class of the 21st century and has plenty of room to grow,” said Maddrey.