Early last year, I wrote a blog post that included the following observation about the cryptocurrency market’s total valuation:
Looking ahead, the $500B level stands out as resistance; from a monthly close perspective, the crypto market only managed to finish above this value one time, in December 2017. Assuming it is surpassed and held in the years to come, the next resistance to watch is the $1T level.
By the end of November 2020, the cryptocurrency market’s total valuation closed above $500B for the first time in nearly three years, finishing the month at around $578B.
Things then got really interesting in December, as the chart below reflects:
By the end of December 2020, the cryptocurrency market’s total valuation exceeded $750B, closing the year at about $759B. That equates to a nearly $200B gain in just one month!
To put this single monthly gain in historical perspective, the cryptocurrency market’s valuation as a whole did not surprass the $100B level until August 2017, nearly nine years after Bitcoin’s genesis block was mined.
Thus, keep in mind that in terms of monthly closes, the cryptocurrency market’s collective valuation has been jostling back and forth between the $100B and $500B levels for nearly three and a half years. Accordingly, November’s close above $500B and the subsequent bullish momentum that carried on to finish the cryptocurrency market’s value over $750B to end 2020 ultimately represents the start of a new period and range of price discovery.
There will be ups and downs, but as we look forward to 2021, do not be surprised if the bullish momentum persists. In that case, the $1T market valuation level may very well be tested. And if it is definitively surpassed, that may be enough to convince skeptics that digital assets as a nascent asset class are perhaps here to stay.