Money is pouring into crypto-currencies. Take a look at my interpretation of each of the charts below.
The above shows the total market capitalisation of crypto currencies. As you can see, the rush into digital assets started towards the end of 2017, and is now accelerating.
Let's home in on the last month in the chart below:
As can be seen in the chart above, the total market cap has gone from $400 billion to $800 billion in just one month. The rush to get into digital assets has just started. Some $400 billion poured into digital assets in just 30 days. At this pace the market will exceed $1 trillion before the end of this January.
Let's now strip-out bitcoin and see how the alt-coins are doing. Look carefully at the chart below.
Excluding bitcoin, the market cap has gone from $150 billion to $550 billion. That means that virtually all of the $400 billion pouring into the digital asset space last month found its way into alt coins.
What's going on?
Here is the flow of funds:
We have two things happening here. New investors are pouring money into bitcoin ($400 billion in the last month). Secondly, old bitcoin investors are diversifying into alternative currencies.
This is a perfectly normal phenomenon. Old bitcoin investors typically have have bitcoins worth more than ten times what they paid. Having so much in one asset isn't sensible, so they are diversifying into other digital assets, rather than going back to fiat.
So who is selling the bitcoins?
The only way into the alt-coin market is through bitcoins. The large bitcoin holders are diversifying into alt-coins by selling bitcoins. Those bitcoins are thus flowing into the hands of those who previously owned alt-coins. Typically this means the founders of the various companies behind the various alt-coins, as well as those who participated in ICOs.
I hate to say it, but many of these people closely connected to ICOs were opportunists. They aren't interested in the crypto market except as an opportunity to tap the clamouring public for their money in exchange for tokens which in many cases have no use at all.
Many of these people - and the companies themselves need the cash. The pumped up market has given them an opportunity to swap their alt-coins for bitcoin and then to sell the bitcoin for cash to those who are newly entering the digital assets space.
Why is this about to drive the bitcoin price up?
I'll get to that shortly. First lets look at the chart for the last 7 days for the whole cypto market as below.
In the time it took me to write this article alone, the market cap increased from $805 billion to $830 billion. In 7 days $250 billion has flowed into digital assets. The flow in is accelerating.
Bitcoin's next leg up.
The only way into the crypto-space is through bitcoin. Fiat can only bitcoin. Bitcoin can buy every digital asset. Bitcoin is the gateway to digital assets.
The flow into bitcoin is massive, but in recent weeks has been matched by the flow out of bitcoin into alt-coins. alt-coins have massively out-performed bitcoin in the last weeks. Before that, bitcoin was the clear winner. The pendulum will swing back again as it always has. When that happens, money will be flowing into bitcoin from new first-time, but also the holders of alt-coins will be converting back to bitcoin too. That will squeeze bitcoin's price much higher.
Look at the chart below. It shows bitcoin's market cap compared to others.
Remember, if you are an alt-coin investor and you want out, you can't sell for cash. There's only one way to go. It's to swap your alt-coins for bitcoin.
Bitcoin is thus going to be squeezed much higher any day now.
Bitcoin price now
As I write this, one bitcoin is worth $16'320, and one finney (1 ten-thousandth of a bitcoin), is worth $1.63. Do you think a finney could get to $2 sometime next week? Seems easy? How about $10? Plenty of alt coins have made 10X moves in less then 3 months.
If you own alt-coins, you may want to think about getting back into bitcoins before the crowd does.
If you are thinking of making your first bitcoin purchase, you may need to move fast.
Conclusion.
$250 billion a week is moving into digital assets. This week the beneficiary is alt-coins. As soon as Alt-coin pendulum swings back to to bitcoin, buyers of bitcoin will be coming from all directions.
Risk Disclaimer
All of the above is a personal opinion and should not be taken investment advice. It is for fun only. If you buy a digital asset like bitcoin, you are buying a series of digits in the ether which may prove to be worthless. Daily prices changes of 10%, 20% 30% are possible. Even 50% daily losses have often been seen in the past.
You could invest today, and look like a fool tomorrow . you might lose all your money, or have it stolen. Don't mess with money you can't afford to lose. Ask yourself - would my spouse divorce me, would my kids hate me?
For those who have seen the accuracy of my previous comments, I would say this. Nobody is right all the time. It's impossible. So don't rely on me. I have bet on a few fat greyhounds and three-legged donkeys in my time.
I don't think this is fat greyhound, but you can't know until after the race has been won.