While much has been made of the high market caps for crypto assets like bitcoin, ether, and others, numerous crypto forecasts by experts and industry insiders suggest it is still early in the growth phase of this relatively new financial sector. While the total market cap of all cryptocurrencies has in recent years fluctuated from under $1 trillion to nearly $3 trillion USD, it may be worth comparing the burgeoning crypto market with more established asset classes to put this market in perspective.
As of Q1 2022, the global equities market is valued at $117 trillion, with the U.S. equities market alone being responsible for nearly 42% of this value — or $49 trillion. In fact, several U.S.-based companies often exceed a trillion-dollar valuation by themselves, including: Apple, Microsoft, Alphabet (Google), and Amazon. While it’s difficult to compare crypto and decentralized finance (DeFi) projects like Bitcoin and Ethereum to these legacy companies, it seems to indicate that the crypto market — on the whole — is still grossly undervalued. Another comparison would be to the precious metals markets, where gold and silver are at around $11 trillion and $1 trillion dollar market capitalizations respectively (as of July 2022). While bitcoin’s market cap — ticker BTC — is valued around $400 billion (as of July 2022). As BTC is often compared to gold and is often given the moniker “digital gold,” BTC may be undervalued as it is currently a mere fraction of gold’s market value. For example, while my crypto management company, CKC.fund, does make strategic trades, part of our strategy is to put fund gains into not only stablecoins, but bitcoin as well, as we feel that its long-term market price may continue to trend upward towards $100,000 and beyond. It is also worth noting that over 90% of all bitcoin is currently in circulation, which is something that simply can’t be said about the uncertain prospective forecast of future global gold reserves.
Some crypto fund managers predict that the total crypto market cap could increase by a factor of 100 by the end of the decade. This would correlate to a $100–300 trillion dollar market cap in 2030. While bitcoin alone could make up a substantial portion of this valuation, it will likely also be bolstered by the growing ecosystem of smart contracts, DeFi, Web3, and the entire crypto ecosystem of decentralized infrastructure and services — and some of the most revolutionary and valuable projects likely haven’t even been released yet. Much like early internet companies were supplanted by the aforementioned hardware and software giants listed above, it’s worth remembering the Mark Twain aphorism:
“History Doesn't Repeat Itself, but It Often Rhymes”
With this in mind, it's relevant to note that my crypto management team at CKC.fund believes several of the crypto behemoths will still be thriving and highly-valued in 2030 (bitcoin, ether, and ADA, for example), while many others will recede in influence— or disappear entirely. Due to these predictions, we have a robust risk diversification strategy that favors reliable returns over risky speculation. For this reason, we seek to limit exposure to any single crypto project — or its related ecosystem, with two caveats.
We will place comparatively larger amounts in bitcoin and top-tier stablecoins when our research shows that the market warrants such a decision.
We will never place more than a minimal percent in any algorithmic stablecoin as we believe the possibility of another black swan de-pegging event — like Terra’s UST collapse — is not worth the risk-reward profile despite some of them offering much better-than-average APY returns.
A recent survey showed that over 70% of high-net-worth individuals (HNWIs) have cryptocurrencies as a portion of their alternative asset allocation, with a notable portion of them choosing to have their allocation professionally managed by a professional fund management team. If you’d like to learn more about our crypto fund and how our first fund consistently outperformed bitcoin (BTC), please feel free to reach out to our team and we’d be happy to set up a consultation.
Do your own research. This article is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security or product that may be referenced.
Very encouraging, David Doss. I'm keeping my $ in crypto.