When will cryptocurrencies turn into a systemic risk?

 

Bitcoin and ether remain the most popular cryptocurrencies. As of the end of 2021, they accounted for more than 60% of the market capitalization of the entire asset class. Bitcoin, trading at $ 47,000 per token, was valued at $ 894 billion, while the capitalization of ether at a price of $ 3,715 per token was almost $ 445 billion.

In total, this is almost $ 1.34 trillion out of the total capitalization of the entire growing asset class of $ 2.223 trillion.

At the same time, Apple (NASDAQ:AAPL) alone was valued at $2.913 trillion as of December 31, 2021 (its shares were trading at $177.57). Thus, an entire asset class is worth less than one company.

As 2022 comes into its own, governments will be increasingly concerned about the “systemic” risks associated with the growth of the digital currency segment. However, in fact, they are concerned about the issue of control over the money supply, since the “crypt” poses a serious threat to fiat currencies.

Impressive rally of 2021

According to CoinMarketCap, at the end of 2020, the market capitalization of cryptocurrencies was $ 767.482 billion, while on December 31, 2021, the figure exceeded $ 2.223 trillion.

Bitcoin has shown impressive growth over the past year, although it closed well below the record high of November 10.

BTC/USD – monthly timeframe BTC/USD – monthly timeframe

On the chart, you can trace the rally from $28,986.74 to the record peak of November 10 at $68,906.4831 and the subsequent rollback to the level of $46,329.11, at which the leading cryptocurrency met 2022.

The percentage increase in ether was much more impressive.

ETH/USD – monthly timeframe/USD – monthly timeframe

Over the past 12 months, the cost of ether has increased almost fivefold (from $738,912 to $3,688,877). In fact, the growth of bitcoin by the end of 2021 was inferior to the average indicator of the entire asset class, while the ether showed a leading dynamics.

Bitcoin is an exchange tool, whereas the Ethereum blockchain is a platform for many altcoins. The Ethereum network is faster, more efficient, and will soon become more environmentally friendly (after the launch of the Ethereum 2.0 update), since the proof-of-ownership protocol requires less energy.