By Josiah Wilmoth
The global average bitcoin price rose to a new all-time high on Tuesday, briefly crossing the $12,000 threshold. The rally raised bitcoin’s market cap above $200 billion, making it not only the most valuable cryptocurrency but also the world’s 22nd-largest circulating currency.
Bitcoin Price Pierces $12,000
Bitcoin reached the $12,000 milestone less than a week after surpassing $11,000, and the bitcoin price has now doubled since November 12, when it briefly dipped below the $6,000 mark. At present, bitcoin has a market cap of $201 billion, making it four-and-a-half times larger than ethereum, the second-largest cryptocurrency.
Bitcoin’s Liquid Money Supply Larger Than 171 Countries
While the march past $12,000 and $200 billion represented important checkpoints, they were not the only milestones that bitcoin crossed today. At $200 billion, bitcoin is now the 22nd-largest liquid currency, as measured by the M1 “narrow money” supply, which refers to the value of all physical currency in circulation, as well as bank deposits.
At the start of the year, bitcoin — then valued at $15.5 billion — would have ranked 71st, just behind Burma. However, bitcoin has soared up the charts this year, and it entered the top 25 earlier in the week, edging past Mexico’s $186.8 billion. Today’s price movement enabled it to leap past Poland, Russia, and Belgium, and it is now just $14 billion away from entering the top 20. The total cryptocurrency market cap, meanwhile, would rank in the top 15, placing it ahead of countries such as Saudi Arabia, India, and Hong Kong.
Of course, the M1 money supply is only a fraction of the world’s wealth, and in practice, bitcoin is currently far less liquid than government-backed fiat currencies. Nevertheless, this metric provides an interesting insight into bitcoin’s status in the global economy.
Why Is the Bitcoin Price Rising So Quickly?
There appear to be two primary drivers for the rapidity of bitcoin’s recent climb. The first is that, over the course of the past several months, bitcoin has received a flurry of mainstream media attention, and many new investors have entered the market. This has been especially true since the weekend following Thanksgiving when the iOS app for bitcoin exchange Coinbase became the top trending search term in the App Store.
The other primary driver is the upcoming launch of bitcoin futures contracts on U.S. derivatives exchanges CME and Cboe. The first contracts will launch on December 10, and, as Strategic Coin has reported, this historic “Wall Street moment” is expected to initiate a wave of liquidity into the markets, primarily from institutional firms who have been waiting for bitcoin to prove itself to be a legitimate financial instrument before they invest money in this nascent asset.
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Featured Image from Corbett Report/Bitcoin.com
By Josiah Wilmoth