By Mitch Rice
Perhaps more so than any other form of investment, the fear of missing out (FoMo) has proven to be a particularly strong force in the world of cryptocurrencies. And ever since they first emerged in 2009 with the launch of Bitcoin, there have always been strong feelings in the crypto community about whether or not the early investor gains have been exhausted. Time and time again however, this has proved not to be the case.
Although we can never predict with any degree of accuracy where exactly the OKX cryptocurrency prices will rise to in the future or what the peak will look like, what we can do is identify some future developments and trends that show how early on in their development cryptocurrencies are. And by focusing on these developments rather than on short term price fluctuations, we can also get a sense of just how much room to grow there still is.
With that said, in this short article we will set out some of the reasons why we think it is still not too late to invest in cryptocurrency.
Market Capitalization: Cryptocurrency Vs Other Financial Markets
One sure fire indication that the cryptocurrency market still has a lot of room to grow, is that the total market capitalization of the crypto market is still incredibly small compared to other financial markets.
Market capitalization essentially refers to the total value of a particular asset or market. It is often referenced in the context of the stock market, where you can calculate the market capitalization of a company by multiplying the share price by the shares outstanding.
In much the same way, you can calculate the market capitalization of a particular cryptocurrency or the crypto market as a whole.
Whilst this figure will obviously vary significantly, as the price of cryptocurrencies fluctuate up and down over the course of a trading day, the market cap of cryptocurrencies are still incredibly small compared to the other major financial markets.
At one point, the total value of all the crypto assets stood close to $3 trillion in Q4 of 2021.
Whilst this might sound like a lot, the market cap of gold at a similar point in time was around $11.4 trillion. Similarly, the total real estate market is worth a staggering $340 trillion, whilst the global equity market was worth $122 trillion in October 2021.
As we can see, even when the cryptocurrency market was at its peak, it was still considerably smaller than the traditional assets that the vast majority of investors invest in. This gives us a sense of just how early on in the development of cryptocurrencies we are. After all, gold has been used by humans as a method of payment and store of wealth for millennia!
Proper Regulation Is Still To Come
Another factor that gives us a sense of how early on we are in the development of cryptocurrencies, is the fact that proper regulation has yet to emerge in any substantive sense.
The cryptocurrency community and the prospect of formal regulation have often produced tension, not least because the original Bitcoin whitepaper envisioned a digital currency and payment system that was decentralised and thus, outside the purview of any single governmental authority.
However, as the technology has developed and more use cases have emerged, the need for regulation has become more apparent. This is particularly evident as more individuals either invest in cryptocurrencies or use them on a daily basis.
With this said, many now view the prospect of regulation as a sign of the maturation of cryptocurrencies. Regulation will also help to encourage investment in cryptocurrencies, which will in turn, help to take them to new heights.
Given that we are still very much in the early stages of cryptocurrency regulation at both the domestic and international level, there is still a lot of room for this technology to grow.
Big Upgrades Ahead
In addition to the factors just identified, we also need to keep in mind the fact that the technology underlying many of the major cryptocurrencies are still very much in their early stages of development. This is important because many of these cryptocurrencies need these upgrades, to make good on the project aims set out in their original whitepapers.
Ethereum is a good example of this, with the second most popular cryptocurrency by market share due to undergo a significant network upgrade towards the end of summer 2022. This upgrade will see Ethereum move towards ‘proof of stake’, which will bring many usability benefits with it.
The same is true across the cryptocurrency sector. And with so much technological development still to come, it is hard to argue that it is too late to invest in cryptocurrency!
Data and information are provided for informational purposes only, and are not intended for investment or other purposes.
