Topic: What limits the market cap of bitcoin? - page 2. (Read 1178 times)

This is a good vis. Makes it clear how small BTC still is and how crazy economics is.
Unlike the number of dollars in circulation, or the number of bitcoins in existence, the actual marketcap of bit coin is not 'real' in the same sense. The price of BTC in dollars can fluctuate arbitrarily based on supply and demand, this could make the market cap of BTC expand or contract by billions, yet no new money was created or necessarily even changed hands.

I have a different view on that subject than most of the posters in this thread.

We have first to ask what are the assets that are "represented" by Bitcoins currently - and that depends heavily on the use cases. If we know that, and take a look on Bitcoin's properties, we can speculate about a future "market cap limit".

That sounds very theoric, but it's not so difficult: Bitcoin is, today, mainly used by people to replace savings accounts, or small amounts of shares by (relative small) speculators. It's also used by companies that offer some financial services like trading and remittances. That Bitcoin is mainly limited to these two sectors is due to its volatility (that makes the risk in most other fields "unmanageable") and high expectations on a future price increase.

So we could add these two use cases (calculate the sum of the "monetary" importance of savings accounts and the market capitalization of real remittances/trading/fintech service companies - NOT the entire banking sector because important items like insurance and loans are currently almost impossible due to Bitcoin's volatility) and we would have a realistic "market cap limit" if Bitcoin conserves the current characteristics.

We can speculate that in the future volatility will be lower, and scalability issues will be solved, so Bitcoin could be used as a "real currency" and will be much more widely adopted. But even then probably Bitcoin's market cap will be much smaller than the world's GDP, because for some use cases other money forms would be more suitable, and there are also altcoins to consider (in the past months about 50-70% of the total cryptocurrency market cap).

What limits the market cap of Bitcoin is the FUD that is created from different media outlets. The people that watch MSM media, which is the avg person, will believe in this crap and not study what Bitcoin really is and why it's not going away.

The market cap of anything is simply how much money the entire company/organization or entity is. For Bitcoin, simply add up all of the Bitcoins in existence and their current price and you get the market cap. Although, something I just realized is the market cap does not account (or maybe it does?) for lost coins. There are probably a million lost Bitcoins. Maybe not that many, but definitely a lot. That will shrink the market cap as these coins are essentially useless, but are being counted anyways.

I don't think you should compare bitcoin's market cap with the USA gold reserve or with the GDP of any country. Because bitcoin is not a mainstream currency and the legal status of bitcoin is not clear to majority of the countries. However, 70 USD billion is not a small amount, it is way higher than the GDP of many countries, probably the majority of the countries.

But slowly the picture is changing. While China banned ICO (not bitcoin) and Japan issued a license to a crypto currency exchange. We will see a lot more investment coming in to bitcoin is future. A lot of people are getting interested about bitcoin on a daily basis. If more countries start accepting bitcoin, you just can't imagine the kind of money can flow in to the crypto community. I think the main roadblock is the unclear legal status due to which we can't see many institutional investors here. Once it is legalized and institutional investors start investing in bitcoin, it will have a dream run.

Let's wait and see how much bitcoin will be mined in next years and how it will rise, you will see also how that 70 will be changed to 120 and more. Nothing limits it, everything depends on current number of bitcoin and it's price of each one. But also I want to mention and there are some lost coins, freezed wallet (many btc but lost key so it's like freezed). But as time goes and it becomes more popular + halvings, market cup is rising too because of bitcoin's price rising.

In the end the 'price' is a purely psychological value in the market. The price at which there are both sellers and buyers. If all holder decided they would not sell for less than $10k, assuming there were still buyers then that would instantly be the price, no fundementals changed in the economy but the market cap of bitcoin just trippled.

Well actually it has a limit, and it is the current amount of all assets in this world. And bitcoin won't likely be reaching that idealistically  , because thae wealth would be a thousands larger or maybe more from the cap of btc today.   So don't waste your emotions about predictions on its market cap because this is not an ICO, bitcoin is a real thing and a soon to be the next highest reserves in this world. The cap right now is just a dust from the wealth of this world, so why wouldn't you hope for more multiplied market cap right?

The only limiting factor is adoption of the currency, the supply will eventually be fixed and thus the only way market cap can increase is with an increase in demand which in theory is unlimited.

This is a good point. Currently the price is inflated because of investors, this means it's a bubble. Unless the adoption starts to rise, sooner or later investor will decide the bull run is over and start dumping bit coin. The price could drop massively.

While bitcoin as an investment tool/store of value itself creates demand, I think transaction volume from real world uses is essential if it's to take off as a currency. Until that happens we're in a bubble IMO, all that's needed is for the holders to decide it's time to sell and the price can go very low.

Ones at the bottom of pyramid are always burnt unless a few of them climb them. Yes the economy will shift to bitcoin with an endless market cap. I think only 10% people know about it as of now so it has a great potential to increase.

Well the theoretical limit is the amount of wealth everywhere but bitcoin in the world, which is tons of trillions, so yes, Bitcoin is a tiny dot in a sea of potential wealth that can come in in various forms, be precious metals like gold and silver, stocks, bonds, commodities and all kinds of assets. BTC could be worth millions of dollars if people diversified small %'s of each of their holdings on their portfolios into BTC.

This should explain it better than any words (just consider BTC is not 70 billion and not 5, but like you see, it's still nothing, we are early adopters)

Now the huge amount of the money is flowing in the bitcoin and more people are investing in bitcoin now. Price of the bitcoin is getting high as the investors are increasing. Bitcoin price and the market cap is unpredictable as you said;  you are right because the price and the market cap of the bitcoin increase with each new entry in bitcoin forum

It is hard to predict the possible market cap. We have only current cap. But all BTC holders hope that it still can multiply several times.

The cap would be sky is the limit until it reaches the possible maximum when all bitcoins have been mined and do circulate globally but knowing theres still 16m coins in circulation.If demand would really rise up on bitcoin then for sure it shoots up its price its just a simple economics subject.It can surpass those big time companies or any other currencies when it comes to its cap.We are still young and there are still big space for adoption and development.

It matters only the demand in the market because we have a lot of miners, therefore we have enough supply in the market.
But the problem that I observed is that, we have more investors than users. And this could affect the demand of bitcoin because only few numbers are using it in their regular transaction, but if bitcoin could be used in different areas then that could increase it's demand.

Realistically i think what caps the market price of bitcoin is that several factors in the stock i cluding its volatility and that fact that some countries are still wavering on integrating bitcoin to their society means that bitcoin still has not showed its true price yet.

Adoption has stalled - the number of transactions per 24 hours has been about 250,000 for over a year. Though segwit has been enabled, people arn't using it, and fees are still a problem.

I honestly think that if bitcoin doesn't resolve it's problems by the end of this year, a flippening will happen and another coin will take the crown.

True. If blockchain can prove scalability then it clearly technically better money and this should happen. In which case no-one should sell, the price will skyrocket... but

If noone sells, the price may go high but no fiat millionaires will get any bitcoins. what happens then? at some point millionaries decided they dont want to exchange everything they own for 1 BTC which could be worthless again tomorrow. price falls. Do the holder decide the game is up and they should sell now? -> price crashes. Or hold and only you BTC in the new paradigm economy?
This territory is full of paradoxes.

We need more users, especially major players in the game.

The fact we know is that there are more millionaries in the world than the number of Bitcoins in existence. Now imagine if at least one-third of these investors decided to buy 1 Bitcoin...