The point at which cryptocurrencies became a mainstream asset would always be a matter of debate. Nonetheless, with a little over three months under 2021’s belt, we feel it’s time to declare crypto a mainstream thing. And that’s surprising.
These are the reasons we’re making this bold claim…
“Shocking” rate of adoption
Here’s how Wall Street veteran and billionaire investor Mike Novogratz described the mainstreaming of crypto in a CNBC interview:
Adoption’s happening faster than I predicted. It’s shocking to me how fast people are moving into the system.
Even though we’ve always believed in crypto’s bullish future, Novogratz is a lot more sanguine. He thinks both individual and institutional adoption have quickly raised bitcoin’s market cap. This makes sense considering its all-time high $61,000 on top of a 100% year-to-date increase. Novogratz expects Bitcoin to eventually surpass the market cap of gold, an over a 10x increase. He believes the steady, ongoing adoption among the Fortune 500 and legendary Wall Street firms will inevitably result in favorable regulation.
And Novogratz’s belief that institutional adoption is driving crypto prices higher has some support.
Crypto market cap breaches $2 trillion
Monday April 5 was the first time in history that the crypto market cap soared past $2 trillion, while bitcoin held a $1 trillion market cap for a week despite fluctuating prices.
As ethereum hit a new record of $2,144, Bitfinex’s chief technology officer Paolo Ardoino thinks this is where momentum shifts away from the pricey two top tokens and towards the broader altcoin market, which has seen its own share of gains (some of them quite spectacular).
Altcoins tend to be more volatile in price than the big 2 (bitcoin and ethereum), and it’s difficult to speculate as to why some investors choose to add altcoins to their savings. Regardless of the reasons, just looking at the huge and ever-growing numbers, we know they are.
Cryptocurrency’s global reach
In their Overview of Worldwide Crypto-Adoption report, Tech Times noted:
Cryptocurrency is truly global. Of the 154 countries we analyzed, only 12 had so little cryptocurrency activity that we gave them an index score of zero. That’s a testament both to the excitement around cryptocurrency as an investment and, especially in the developing world, as a means of value storage and medium of exchange.
The report found 101 million crypto users worldwide (not accounts, actual users) and went on to cite their explanation for the rapid adoption rate:
- Payments: wider acceptance of crypto as a payment method by “shops, restaurants, attractions, grocery, lodging, nightlife, sports, transport, and professional services”
- Institutions: at least 51 companies now hold bitcoin
- Exchanges: over 1,100
- Crypto ATMs: about 17,000 worldwide
- Hiring: there are now 953 crypto companies in the U.S. alone, and according to LinkedIn “blockchain” was the skill in highest demand in 2020
And there’s a reason all those companies are hiring…
The new whales
To reinforce Novogratz’s point, the crypto market seems to soar every time a company with name recognition enters the space. From PayPal to Tesla, market participants are now not just looking at whether a company is exposed to crypto but in which fashion. For example, the unexpected token purchase by Tesla for the apparent primary reason of securing capital stood in contrast with PayPal’s gradual, bare-bones reveal of a crypto offering.
Here’s the thing about these new whales, though. You might expect super-edgy tech companies like Tesla, Square, MicroStrategy and the like to jump on the crypto wagon.
That’s not all we’re seeing, though. The oldest and stodgiest of OG banks, brokers and corporations are embracing crypto. The highest-profile names include:
- BlackRock, the world’s largest asset manager
- BNY Mellon, America’s oldest bank
- JP Morgan Chase
- Goldman Sachs
- Deutsche Bank
- Morgan Stanley
There’s more, a whole lot more, but there are way too many to write about. There’s a reason financial institutions will soon feel obliged to have a crypto arm in order to keep up with the times. Soon, everyone will expect their banks to accept deposits in bitcoin or ethereum because it will just be another thing banks do: cash paper checks, rent you a safety-deposit box, and give you a place to stash your cryptocurrencies.
That will be the day cryptocurrency has truly reached its full potential. And it may take a little while yet.
In the meantime, though, forget FOMO.
The passengers are on board, the course is set, but the boat has not yet left the pier
Considering the market’s six-months-long climb, and all the news about adoption and payments and banks jumping on board, it’s easy to feel like you missed the boat.
On the other hand, crypto’s current standing could simply be the realization of an infrastructure took years to build, waiting for events that sent prices rocketing to new all-time highs. It sure looks like all these new passengers who’ve bought tickets on the SS Crypto Cruise are likely to send demand, and therefore price, even higher.
But the boat hasn’t pulled away yet. And unlike non-metaphorical cruise liners, the SS Crypto Cruise has an unlimited supply of tickets. The only problem is, they seem likely to get increasingly expensive… It might be time to diversify your IRA with cryptocurrencies before the voyage starts.