What limits the market cap of bitcoin?

[albertvert]

US gold reserves currently worth something like $300Bn, the largest in the world (though it's no clear if anyones checked its there). All this is less than a company like Google but still $70Bn is a lot of money.

I'm sure there is room for the market cap of bitcoin. As you are saying the gold is worth 300B in just USA market then just imagine how it is worth in the whole world. That's a lot of money and if that can come into gold then I'm pretty sure it can come into all new crypto currency like bitcoin.

Again, the "digital gold" theory. For me, it's based on wishful thinking.

A simple example of the fundamental difference between gold and Bitcoin comes into light when trying to answer the question: Does gold have alt-coins?

You can now say that every other precious metal could be an "alt-coin" for gold. But gold has properties that can't be copied: It's beautiful (and thus used in jewelry), useful in some industrial applications (other metals have other applications), and has a lot of tradition as store of value, (as you already said but my emphasis is in another point). Bitcoin, instead, is technically much easier to copy and so fundamentally different.

Above all the third property of gold is also pointing in the direction I went with my previous post in this thread: The most important aspect that dictates long-term prices and market cap is the real use. Gold is so institutionalized as "store of value" that you would need decades or centuries to let holders switch to other assets. (And it's difficult to move, unlike Bitcoin)

Only if Bitcoin achieves an important "network" that really use it, it can come near the properties and the "un-copyability" of gold, and so become a real competitor.

Limits the market cap of bitcoifrom of e For the bitcoin price to rise  a lot of money would have to flow in. Right now it seems like every grandma and her dog is being persuaded onto the bitcoin bandwagon. Is this not a sign of an impending crash, in which those at the bottom of the pyramid get burned? Is the bitcoin rise sustainable? Where will the money be flowing in from of the limits market cap of bitcoin.

[carlerha]

There is no limit on market cap of bitcoin, the more the investors invest in bitcoins, the more market cap it have. But it increases our decreases due to market manipulation and increases due to a news favouring bitcoin. And considering that the combined market cap of all the cryptocurrencies is equivalent to $150bn and most of the world don't know Much about bitcoins and crypto, so there is huge amount of potential in crypto that is right now untapped and one it goes mainstream then there works be an exponential growth and market cap will reach a $1 trillion mark.

Market cap of bitcoin is concern with increasing demand. Although still the majority of people have no idea about bitcoin, so i am sure that as soon as people will know about bitcoin, bitcoin market cap will continue increasing. i think still bitcoin has more potential to increase its capital, because the popularity of bitcoin is increasing rapidly and even in backward countries bitcoin is now introduce and they are also taking interest to invest money in bitcoin.

[d5000]

Right now it seems like every grandma and her dog is being persuaded onto the bitcoin bandwagon. Is this not a sign of an impending crash, in which those at the bottom of the pyramid get burned? Is the bitcoin rise sustainable? Where will the money be flowing in from of the limits market cap of bitcoin.

The rise could be sustainable if the ecosystem around Bitcoin really expands.

As I explained some posts ago, this would occur if there are more use cases. For example, remittances is one of the fields where Bitcoin has extreme potential, because the volatility risk is much lower there as with most other applications (because the user only needs to "hold" the coin [and hold the bag if there is a crash] for some minutes, while the transaction is being confirmed). If there are more remittance operators available, and Bitcoin will be massively used for that, this would be reflected in a "sustainable" price rise.

But currently this "real adoption" still is limited - so it's perfectly possible that the current market cap is "overvalued" if we take into account the really existing current Bitcoin ecosystem. And so "Grandma and her dog" could get burned 

[astralliam]

The rise could be sustainable if the ecosystem around Bitcoin really expands.

As I explained some posts ago, this would occur if there are more use cases. For example, remittances is one of the fields where Bitcoin has extreme potential, because the volatility risk is much lower there as with most other applications (because the user only needs to "hold" the coin [and hold the bag if there is a crash] for some minutes, while the transaction is being confirmed). If there are more remittance operators available, and Bitcoin will be massively used for that, this would be reflected in a "sustainable" price rise.

But currently this "real adoption" still is limited - so it's perfectly possible that the current market cap is "overvalued" if we take into account the really existing current Bitcoin ecosystem. And so "Grandma and her dog" could get burned 

I agree. Reworld uses cases are necessary to sustain BTC long term and at the moment it must be over valued.

Sending money is an easy early uses case, but it's not clear what it might take to get crypto more widely adopted.
I was chatting to a local organic farmer recently about whether they would be interested in starting to sell their produce in BTC. I think the idea is interesting, but as most consumers aren't using BTC they unlikely to adopt. It will take time for ordinary people to get used to managing their funds and feeling safe doing so. No doubt there are more software innovations needed to really make this happen.

The other thing is money creation. Now we have central banks and commercial banks creating money (as debt) and feeding it down to companies, who use it to pay staff. This creates massive stability (inertia?) in the current system. It seems much more likely that an alternative crypto-based economy grow in parallel to this old paradigm, without some major innovations this can only happen very slowly in the margins and it will take a long time to gain critical mass.

Perhaps one day noone will ask how much a bitcoin is worth today. Rather they will ask how much a USD is worth today. But the truth is this could take long time.

If BTC crashes it could go down like the nasdaq in 2001 and take quite a long time to come back up. I think it will. If I can a stash of bitcoins, I'd definitely hold some right now, but I'd also be looking to divest some into safe stores of wealth.

[atc1-REAL]

Nothing limits it per-se, except the positive awareness associated with it plus the amount that people are willing to invest in it. Seeing as to how it is a volatile asset at the whim of market forces and how there is no market regulator associated with it, most people view it as an unsafe investment and naturally the market cap is limited by the inflow of funds into it, which is why the market cap is at where it is now.

[CoinsCoinsEverywhere]

Something to keep in mind: bitcoin market cap is nothing more than the multiplication of bitcoin's price by the number of bitcoins in existence.  While it is somewhat useful when comparing to other investments like companies, it does not represent the amount of money that has been invested in bitcoin.

[astralliam]

Yes. It would be quite interesting to know how much all current holders actually paid in total but it's something we can never know.

[jaysabi]

The rise could be sustainable if the ecosystem around Bitcoin really expands.

As I explained some posts ago, this would occur if there are more use cases. For example, remittances is one of the fields where Bitcoin has extreme potential, because the volatility risk is much lower there as with most other applications (because the user only needs to "hold" the coin [and hold the bag if there is a crash] for some minutes, while the transaction is being confirmed). If there are more remittance operators available, and Bitcoin will be massively used for that, this would be reflected in a "sustainable" price rise.

But currently this "real adoption" still is limited - so it's perfectly possible that the current market cap is "overvalued" if we take into account the really existing current Bitcoin ecosystem. And so "Grandma and her dog" could get burned 

I agree. Reworld uses cases are necessary to sustain BTC long term and at the moment it must be over valued.

Sending money is an easy early uses case, but it's not clear what it might take to get crypto more widely adopted.
I was chatting to a local organic farmer recently about whether they would be interested in starting to sell their produce in BTC. I think the idea is interesting, but as most consumers aren't using BTC they unlikely to adopt. It will take time for ordinary people to get used to managing their funds and feeling safe doing so. No doubt there are more software innovations needed to really make this happen.

The other thing is money creation. Now we have central banks and commercial banks creating money (as debt) and feeding it down to companies, who use it to pay staff. This creates massive stability (inertia?) in the current system. It seems much more likely that an alternative crypto-based economy grow in parallel to this old paradigm, without some major innovations this can only happen very slowly in the margins and it will take a long time to gain critical mass.

Perhaps one day noone will ask how much a bitcoin is worth today. Rather they will ask how much a USD is worth today. But the truth is this could take long time.

If BTC crashes it could go down like the nasdaq in 2001 and take quite a long time to come back up. I think it will. If I can a stash of bitcoins, I'd definitely hold some right now, but I'd also be looking to divest some into safe stores of wealth.

I agree with just about everything you wrote, but want to highlight the bolded section. It seems to me that this is an impossibility, because nobody can afford to transact in btc or store value in it with such volatility. Any producer or merchant accepting btc as a payment option has to immediately convert the transaction into fiat or risk having their profit margin eaten away by the volatility. It seems impossible to me to have a parallel btc-denominated system grow along side the fiat-dominated system because everything to sustain a btc-only system is not produced presently. There will still be points where btc has to be converted in order to interact with the larger economy, and god help you as a businessman if btc is in a down period when you have to buy new supplies, because all the transactions you would have done in btc over the previous period would now be at a loss.

[astralliam]

The other thing is money creation. Now we have central banks and commercial banks creating money (as debt) and feeding it down to companies, who use it to pay staff. This creates massive stability (inertia?) in the current system. It seems much more likely that an alternative crypto-based economy grow in parallel to this old paradigm, without some major innovations this can only happen very slowly in the margins and it will take a long time to gain critical mass.

Perhaps one day noone will ask how much a bitcoin is worth today. Rather they will ask how much a USD is worth today. But the truth is this could take long time.

If BTC crashes it could go down like the nasdaq in 2001 and take quite a long time to come back up. I think it will. If I can a stash of bitcoins, I'd definitely hold some right now, but I'd also be looking to divest some into safe stores of wealth.

I agree with just about everything you wrote, but want to highlight the bolded section. It seems to me that this is an impossibility, because nobody can afford to transact in btc or store value in it with such volatility. Any producer or merchant accepting btc as a payment option has to immediately convert the transaction into fiat or risk having their profit margin eaten away by the volatility. It seems impossible to me to have a parallel btc-denominated system grow along side the fiat-dominated system because everything to sustain a btc-only system is not produced presently. There will still be points where btc has to be converted in order to interact with the larger economy, and god help you as a businessman if btc is in a down period when you have to buy new supplies, because all the transactions you would have done in btc over the previous period would now be at a loss.

Yes, I can't argue against this either. Anyone producing goods for instance with fiat based upstream costs would probably find selling in BTC (and holding it) a risky strategy. couple of pounts:

i) There's the upside potential to consider too. If you sold your carrots for some bitcoins a few years ago and you'd very happy about it today.  (but you'd have to have been able to afford to hold them).
Basically volatility isn't a problem in you can afford the risk.
Say, if I'm a comfortably well off consultant who own a home, my running cost are quite low I can afford to charge my services in BTC knowing they might go up for down Vs Fiats. In general suppliers who can afford to take the risk on a portion of their income will find this much easier.

iii) Conversion to more stable values stores is always an option. If I sell my BTC and convert to fiat as soon as I sell my goods there a lot less risk. It's important to remember, fiats can go up and down too. The UKs brexit referendum dropped GBP by 20% over a few days and this affected importers significantly. It's not BTC level volatility but just pointing out there is no ultimately stable currency.
(Maybe BTC will become the ultimately stable currency one day? once everything has been mined and there a no more forks its possible BTC becomes ridiculously stable. I'm not really sure this is likely and it's not necessarily easy to define what stable actually means, for now it means compared USD but that may not always be the case.)
The downside of simply selling in BTC and converting to fiat is that BTC prices will be equally volatile.

[katinko]

Well until now i do not know if there is a market cup in bitcoin value because it was continuous increasing which is good things to all of bitcoin earners and by continuous adoption in crypto currency it will helps the credibility of all coin would be stronger.

[CoinsCoinsEverywhere]

iii) Conversion to more stable values stores is always an option. If I sell my BTC and convert to fiat as soon as I sell my goods there a lot less risk. It's important to remember, fiats can go up and down too. The UKs brexit referendum dropped GBP by 20% over a few days and this affected importers significantly. It's not BTC level volatility but just pointing out there is no ultimately stable currency.

While it's true that all currencies fluctuate some with respect to each other, in general, 1% in a day for a fiat currency is an outsized move.  Bitcoin can change by that much in a minute at times of high volatility.

(Maybe BTC will become the ultimately stable currency one day? once everything has been mined and there a no more forks its possible BTC becomes ridiculously stable. I'm not really sure this is likely and it's not necessarily easy to define what stable actually means, for now it means compared USD but that may not always be the case.)

I think that something is going to have to change fundamentally for bitcoin to stabilize in price.  The biggest problem right now is that there's no good way to determine how much a bitcoin is worth--it doesn't really have any intrinsic value.  The value of fiat currencies is at least more or less determined by the economy of the country that's represented by the currency.  Without some kind of economic system that's represented by bitcoin, I don't think it's ever going to become as stable as a fiat currency.