The cryptocurrency also has no physical presence and can be utilized or exchanged in real-time, making it ideal for global trade. You can check bitcoin-360-ai.org to get an automated trading experience by accessing the best-in-class trading bots and strategies. In just two years, the Bitcoin market cap soared from $60 billion to over $1 trillion. As of June 2018, Bitcoin was trading at around USD 7200 per coin worldwide, although this is volatile and dependent on investor interest, and by November 2021, the currency was hovering above $67000.
How much of the world’s money is invested in bitcoin?
The answer to this question is difficult to determine, but the cumulative value of all bitcoins in circulation since 2009 is around $800 billion. However, not all bitcoins are created equal. According to Coin base, 1% of the circulating supply was mined in 2009 and 2.5% in 2015. As a result, the monetary authority behind the currency has been slowly decreasing over time and currently supplies about 75% of the supply.
This discrepancy due to the steep deflationary trend in the value of bitcoin has led to many investors hoarding. However, the ultimate risk for investors is that this massive digital currency will become insolvent, which many analysts believe is imminent.
The volatility due to hoarding and price manipulation further cements bitcoin as an investment vehicle for large traders, who take advantage of the trading activity. As per Investopedia, by 26th November 2021, bitcoin’s market cap was around $1 trillion; however, since it is aggressively volatile, the market cap plummeted within a few days.
What determines the price of bitcoins?
Like gold, bitcoins do not have much intrinsic value or utility. Therefore, its value is entirely driven by speculation and supply/demand trends. There is a limited supply of bitcoins, and their value is determined by the number of people willing to pay for them. The bitcoin supply cap is 21 million coins; however, that number is expected to diminish gradually as miners mine coins.
As a result, the price per coin surged from ~$1306 in early 2017 to peak at $20355 in mid-December, and this was the first gigantic bitcoin jump in price.
What percentage of all money is Bitcoin?
2.9% as of November 2021, bitcoin is a very young cryptocurrency that has penetrated only a tiny fraction of the global financial system. As such, it isn’t easy to accurately estimate the percentage of money invested in cryptocurrency. Several different estimates are circulating the internet, such as 10%, 50% and 90%.
According to Investopedia, about 30% of all global stock money is invested in Bitcoin. Since many investors do not diversify into other cryptocurrencies or alternative investments, they hold bitcoin as their primary stock. Moreover, this high percentage can be attributed to the extreme popularity and massive growth over time of bitcoin generated by buying volume.
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Bitcoin and the Money Supply:
Bitcoin is deflationary, and its value is directly tied to user adoption. As an example, as per the bitcoin inflation schedule, the number of coins mined during 2009-2023 will account for 99% of all bitcoins mined. Furthermore, miners need to invest a lot more in the capital due to diminishing returns on mining activity to continue generating new bitcoins.
At best, miners can mine 0.5 coins per day, which is a minimal output about the exponentially rising price graph of bitcoin. When there is a shortage of bitcoin supply and increased prices, liquidity shifts to other cryptocurrencies. As a result, the demand for alternative cryptocurrencies increases as people rush to cash out on altcoins to monetize their currencies.
For example, Zcash, which operates on the same principles of anonymity as bitcoin in terms of blockchain technology, has exploded in demand over time. Since high demand for bitcoin is driving up the price of bitcoins and creating a large gap between supply and demand, the rate of bitcoin inflation is increasing rapidly.
Over 1 million private addresses exist, which are stored in what is called ‘The Blockchain’. Although there are no suspect identities with these addresses, people can use them to trace individual ownership back to the fiat currency. However, as per data from BitInfoCharts, only around 100 private addresses hold 20% of all bitcoins in circulation as of November 2021.
