Cryptocurrency has experienced something of a renaissance over the past month and the prospect of a trillion dollar crypto market seems to have been resurrected.
Having slid by over 50% between mid-February and all the way through March, the total cap for the cryptocurrency market has since begun to make up on its losses, recouping nearly $200bn in value since the start of April, according to CoinMarketCap.
Whilst still some way off hitting the highs reached in January, sustained recovery has led to a return of bullish sentiment within the cryptocurrency sector.
On Wednesday, the co-founder of Reddit, Alexis Ohanian said in an interview with Fortune that he believed Ether would reach $1,500 (he said $15,000 in the interview but later claimed he misspoke) and Bitcoin $20,000, at some point during 2018.
Such a rise – if it were to happen – would take the total cap of the cryptocurrency market close to its record high of $830bn: and that’s if the other 1,500 coins didn’t budge in price.
The Booming Crypto Bulls
Such bullish sentiment raises the question on whether the cryptocurrency market could reach a value in the trillions of dollars in the next couple of years: so is it possible?
The idea is not new: Michael Novogratz mooted the possibility of a $5trn crypto market in a Bloomberg interview last year, and he isn’t alone.
The CEO of the deVere Group, Nigel Green has predicted that the price of Eth could hit $2,500 by the end of 2018, giving it a market cap of just shy of $250bn; IBM, one of the world’s largest tech companies, is banking on a $3.1trn market by 2030.
Of course, what people and institutions predict, and what actually materializes are often two very different things: just look at predictions for the Internet that were made in the mid-90s.(Both bullish and bearish.)
But is there any substance behind the desire for a trillion dollar crypto market of the type hoped for by Ohanian and Novogratz?
Well yes: it may help cryptocurrency projects make the case to mainstream society that the tech they offer has real-world applications and benefits.
Ethereum and IOTA: Crypto Pin-Ups?
Take the manner in which the development team behind the Ethereum network have responded with solutions to problems with the project.
Issues with scalability, most notably demonstrated during the Crypto Kitties debacle back in December, have been met with proposals of sharding, essentially portioning data processing into smaller, manageable chunks.
Similarly, ERC20 tokens, which work off the Ethereum network as decentralised applications (dApps) have also had some good news over the past couple of weeks.
Kyber Network, which plans to be the first fully decentralised exchange, announced on Monday the launch of an ICO-participation platform; ICON (ICX) unveiled its blockchain incubator programme and VeChain, a logistics and the supply-based token has secured partnerships with major global suppliers, including BMW.
All this positive news, which effectively highlights a strong and serious use case for the Ethereum network has meant the price of Ethereum has risen by $200 in the past two weeks, which even the BatchOverflow bug scare failed to inhibit.
Ethereum isn’t alone either. Since the start of the week, the IOTA Foundation has unveiled an ecosystem platform that will greater facilitate collaboration and co-development and gave a sneak preview into ‘Qubic’, which appears to add smart contract capability to the IOTA network, or ‘Tangle’.
This has equally been met with a strong performance over the last couple of days, which has taken the market cap up by 30% to $2bn.
Demand Can Fuel the Trillion Dollar Crypto Market
Like any other good or commodity, a rise in value is nearly always attributed to increasing demand relative to supply: the more of commodity ‘x’ is being sought after and purchased, the likelier the chances that suppliers will sell the commodity for a higher price.
This trend, fundamental to economics, has underpinned price rises in goods such as tulips and gold, and even the meteoritic price rises that took Bitcoin from just under $1,000 at the beginning of 2017 to $20,000 by December.
Of course bubbles are a very real threat, and as LitePay illustrated back in March, too much hype surrounding a project, even when endorsed by supposedly reputable figures, can end in tears.
However, as cryptocurrency projects like Ethereum and IOTA move away from the whitepaper phase to implementation and adoption, so can their price also be expected to rise, because as they gain utility, they also gain value.
Whether the crypto-market could grow into the many trillions of dollars is still uncertain: for the cryptocurrency market to reach $5trn – as predicted by Novogratz – it would need to experience a near 1030% increase in its market cap from its current valuation of $452bn.
For perspective, in the time period between April 2013 and today, the cryptocurrency market has risen by nearly 30,000%.
Although it’s a fallacy to assume history will repeat itself; in the words of Mark Twain, it has been known to rhyme.