If you’re reading this you’re probably aware of the unimaginable gains that have been seen across the crypto market this year. Last night we saw a new and very important milestone that has provoked some interesting commentary.
The total value of all digital assets as listed on coinmarketcap.com has surpassed $500 Billion for the first time. To think, this number has grown from just $14.5 Billion one year ago today making for an unbelievable percentage growth of 3448%.
These numbers spark a lot of questions. Ethereum’s founder and one of the most notable figures in the crypto-space Vitalik Buterin posted a lot of these questions on his twitter feed this morning.
Mostly, Vitalik wants to know if this valuation is justified and more importantly how are we changing the world for the better?
What cryptotraders like myself want to know is how long will this current surge last and what is likely to drive the market going forward.
Though I realize that many of you are here for crypto, there are some huge things happening in the traditional markets that we need to get out of the way first. At the end of the day, I’m a markets man and as such cannot ignore Fed Day.
This evening, the US Federal Reserve Bank who has been the biggest driver of market prices over the last decade will raise their interest rate from 1.25% to 1.5%. In Forex markets this type of move is usually a really big deal as we can see many large players moving their funds into Dollars in order to take advantage of the bigger rate.
However, as the market has already been certain that this move will come over the past month the increase of 0.25% is already priced into the markets. What investors really want to know is how much will they increase rates going forward?
Even though the Fed has boldly lied to us about how fast they will be raising the rates many times in the last few years, somehow what they say still holds meaning and so we must listen.
Overall, the Fed is on an extremely gradual pace to make money more expensive. US Dollars have been cheap and easy since the financial crisis of 2008, a policy that many say is causing some bubbles in the stock markets and imho is a major contributing factor to the current boom in cryptocurrencies.
This graph shows the expectations of 16 Fed members over the next few years. Each one places one dot for each year telling us where they think rates will be at that time. As we can see, even the most aggressive member is still expecting the rates to remain below 4% by 2020. So money is likely to remain extremely cheap.
Hyperinflation Is Happening Already
All this cheap money is extremely unsettling and even dangerous, for some regions more than others. Especially when there is an external event that suddenly changes the picture.
For example, a political crisis in Zimbabwe or Venezuela. But it’s not just the third world anymore. Yesterday the Bank of England announced a shocking inflation report showing that prices are up 3.1% in the last year.
Particularly concerning is the price of specific goods. Fish is up 15%, olive oil 9.3% and butter is up 23% over the past year.
Meanwhile, salaries in the UK have not gone up nearly enough to cover these higher prices. Today the UK will release their Average Earnings Report, which analysts are forecasting has risen just 2.5%.
Forex traders will react directly to the data as it comes out in real time. Though crypto-investors will not be reacting in such a methodical way, they are being affected by the overall trend and certainly feel their pockets getting pinched by the flawed system that increasingly favors the ultra-wealthy at the expense of Mr. Joe Public.
What’s next on this CRYPTO Surge?
It’s been a powerful run in the crypto market, especially over the last few weeks. Traders seem to be taking turns with the different top cryptos buying up one at a time, in many cases doubling or tripling the value within a 48 hour window.
It started with Ether Classic, then Dash, then IOTA, then Litecoin, and last night we saw Ripple nearly double in 12 hours.
Here’s a few important updates that may drive prices going forward…
–Internet giant eBay is now considering to add bitcoin!! = Huge news if they do it!!
–UBS and several others using Ethereum for MiFID compliance. MiFID 2 is a huge deal right now in the financial world and many large banks have announced a pilot to start storing data on the Ethereum Blockchain.
–Emergency Crypto Meeting in South Korea. South Korea is by far the largest buyer of cryptocurrencies. Updates about what will happen in this meeting on Friday are sure to move the markets.
Have an awesome day ahead!!