$25 Billion in 30 Days: Cryptocurrencies and The Digital Age Gold Rush

Posted by Terrance Wyatt on

The California Gold Rush started on January 24, 1848, when gold was found by James W. Marshall at Sutter's Mill in Coloma, California. The news of gold brought some 300,000 people to California from the rest of the United States and abroad.The sudden influx of immigration and gold into the money supply reinvigorated the American economy, and California became one of the few American states to go directly to statehood, in the Compromise of 1850. Fast forward nearly 170 years later and it's growing more evident by the day a modern day gold rush may be transpiring although this one is completely digital. 

In early March 2017, the world's most popular cryptocurrency - Bitcoin - surpassed for the first time in its brief history the price of an ounce of gold at more than $1,270 for 1 Bitcoin. Given Bitcoin and other cryptocurrencies are still relatively unknown to the general population at this point made this development both surprising and intriguing to most of  the financial world to say the least.  In the case of Bitcoin which in the span of just under 9 years has went from a novel idea in a research paper to a fully functioning new global asset class with a market capitalization of well over $20 billion and a technological base that has promise to revolutionize countless industries. 

Since March 2017, Bitcoin has since seen dramatic fluctuations in price falling back down to nearly $900 as the United States Securities and Exchange Commission rejected the 1st real attempt to legitimize Bitcoin within the global financial system by creating a publicly traded Exchange Traded Fund in the United States that would have allowed institutional and retail investors alike to legally and easily move money into Bitcoin from more traditional sources such as retirement plans and pensions. However, other major governments around the world such as Japan have taken a different viewpoint on Bitcoin by officially recognizing it as a form of legal currency within its borders. 

This dramatic increase in press coverage of Bitcoin and other cryptocurrencies along with corresponding technological innovations has added an unimaginable $25 billion in market capitalization on cryptocurrency exchanges in the last 30 days alone at the time of this article. The price for 1 Bitcoin now stands far beyond the price of an ounce gold at nearly $1,800 (an all time high). Now some critics argue this dramatic and sudden rise has the telltale signs of a bubble market while other highly respected financial proponents have projections that show the rally is still in its very early stages. 

Over the last 100 years, The price of gold too has seen its fair share of extreme volatility periods as various geopolitical factors have influenced supply and demand. However, gold has throughout history remained a staple investment for sophisticated investors in a well-diversified portfolio. Will Bitcoin and other cryptocurrencies get the same treatment over time? That's literally the MILLION DOLLAR question on everyone's mind.

If you're interested in learning more about Bitcoin and cryptocurrencies please feel free to reference our lecture on the subject and for more information on other investment vehicles please access my full investment knowledge course on Udemy


Share this post



← Older Post Newer Post →


Leave a comment

Please note, comments must be approved before they are published.