Some alternative cryptocurrencies have been surging in popularity recently.
itcoin (BTC), by far the most widely held and closely followed digital currency, or cryptocurrency, is down by more than 7% over the past day. However, most other cryptocurrencies are continuing their move upward. Here’s a rundown of the latest price action in the major cryptocurrencies, as well as other top news from the industry.
Today’s cryptocurrency prices
Here’s how the five largest cryptocurrencies by market capitalization stack up, and how much each has changed over the past day:
|Cryptocurrency Name (Code)||Price in U.S. Dollars||Day’s Change|
|Bitcoin Cash (BCH)||$2,510||17.2%|
Bitcoin is falling while other cryptocurrencies continue to surge
As you can see, bitcoin has been falling today by quite a bit, which is the opposite of what most other major cryptocurrencies are doing.
Many alternative cryptocurrencies, or “alt-coins,” have surged in popularity recently. There are a few potential reasons for this, such as these other coins’ relatively low price. If you’re new to cryptocurrencies and have, say, $1,000 to invest, it can seem more attractive to buy more than 1,200 Ripple than less than 6% of one bitcoin.
Furthermore, some of these alt-coins solve major problems that people are having with bitcoin. For example, bitcoin transaction costs have gotten much higher, and transactions are taking hours to complete due to high network traffic. Conversely, both Ripple and Litecoin cost just pennies per transaction and can complete transactions in a small fraction of the time.
In fact, most people are surprised to learn that bitcoin makes up less than half of the cryptocurrency market. The value of all bitcoins currently in circulation is about $304.7 billion, while the entire cryptocurrency market is worth $624.1 billion.
Don’t confuse speculating with investing
As a final thought, keep in mind that the daily performance doesn’t tell the full story on cryptocurrency volatility. In fact, a day when bitcoin moves by only 3% in either direction is a relatively quiet day.
With that in mind, let’s take a look at the performance of the largest cryptocurrencies over some longer time periods, and see how investors should interpret this information.
|Cryptocurrency||1-Week Change||1-Month Change||6-Month Change||1-Year Change|
|Bitcoin Cash (BCH)||55.6%||110%||N/A||N/A|
As you can see, bitcoin is actually on the lower end, as far as cryptocurrency volatility goes. Ethereum has increased more than 100-fold over the past year, while Ripple has more than doubled within the past week alone.
Here are the key takeaways. First, it’s important to realize that some of these performance figures are simply not sustainable. For example, if Ethereum were to rise another 10,767% over the next year, the digital currency would have a $8.9 trillion market cap. In other words, don’t buy any digital currencies and expect the same performance going forward.
Most importantly, any asset that can double, triple, or more in such short periods of time is a speculative asset, not an investment. Put another way, if it can double in a week, it could also get cut in half in a week just as easily. Given cryptocurrencies’ current volatility, they are far closer to lottery tickets than to stocks and bonds on the risk spectrum.
Author: Matthew Frankel (TMFMathGuy)