Fed Torn On The Effects Of The Tax Cut; Altcoins Pick Up Crypto Slack

Bitcoin Stops Rallying But Altcoins Pick Up The Slack

Bitcoin hasn’t made a new high since the peak at $19,600 3 weeks ago. The latest price is $15,000. However, the altcoins have been exploding in the past few days. This has led the total market cap of all the cryptocurrencies to reach $763 billion. Bitcoin’s dominance has fallen to a record low in the past few days. At last check, the dominance is 33.4%. This bubble is becoming relevant to the global economy. It’s about to pass Apple’s size. Comparing a stock’s market cap with cryptocurrencies, isn’t apples to apples (no pun intended), but I’m not using it as a valuation metric. I’m using it as a measuring stick to see how big of an impact a crash would have on the markets and the economy.

The chart below shows the effects a bitcoin wipe out could have on various economies. As you can see, Russia, Nigeria, and New Zealand would be the most hurt by a crash in bitcoin. New charts need to be made on what the impact a crash in Ripple and Ethereum would be. The speed at which these coins increase in value make charts become irrelevant quickly. To me, the increases in the smaller currencies, makes it seem like retail investors are falling for pump and dump schemes. There are differences between them, but when it comes to currency speculation, price is everything.

I am reinforcing the concept that saying a collapse at these prices wouldn’t affect the economy and markets is pointless. The analysis that needs to be done is what would happen if they went up 10 fold from here and then crashed? Most people in finance don’t want to consider this because they can’t even believe the prices have gotten this high. The end of bubbles is when the velocity of the increase peaks. This means if it continues on this uptrend, unimaginable gains are not only possible, they are likely. The crash from that point will affect the economy. I also think it’s reasonable to wonder how much consumer spending from millennials was augmented by this rally in the 2nd half of 2017.