The Biggest Opportunity in Crypto

Cryptocurrencies continue to go bananas, with the market capitalization of all cryptocurrencies more than doubling from about $200 billion to almost $500 billion in the last 30 days.

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Bitcoin represents about 60% of the market with a market cap of $292 billion, and though there are more than 1300 cryptocurrencies listed on CoinMarketCap, the top 10 currencies represent almost 90% of the market.

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Related:
Bitcoin 101
Did We Miss Out on Bitcoin?
Gartner Symposium on Blockchain

Coinbase is the most popular and easiest to use place to first begin buying & trading cryptocurrencies, and their new account signups have gone through the roof this year. The runup in cryptocurrencies over the last couple months can be pretty easily explained through the lens of Coinbase, and it reveals what I think is the biggest opportunity in crypto right now.

  1. A new user hears about Bitcoin and wants to invest, so they create a Coinbase account and fund it with a few hundred dollars using a credit/debit card or their bank account.
  2. That new user either buys Bitcoin because it’s had the most media coverage about it’s rocketing valuation, or maybe instead of buying 0.03 units of BTC they’d like to buy a whole unit of something. Coinbase also has Ethereum & Litecoin, which last week were trading for around $400 & $100 respectively. Litecoin sounds like Bitcoin, and instead of 0.03 BTC maybe the new user buys 4 LTC. Or, a new user might buy 1 unit of Ethereum.
  3. Now a week later, the people who bought Bitcoin have seen a big gain (BTC is up about 50% in the last week). And Ethereum is up 50% as well. But the people who bought Litecoin have really won, with its value more than tripling in the last week. So the Bitcoin buyer decides to diversify and sell some of their Bitcoin to buy some Ethereum & Litecoin as well, which further increases the value of ETH & LTC. All this is very easy because those currencies are all listed on Coinbase.

But what if users want to diversify further and to buy some earlier-stage cryptos that might have even more longterm upside? There’s a big barrier there, because now you have to open a new exchange account elsewhere, transfer funds to another (less trustworthy) source, and try to sort through the other 1300 currencies to decide where to invest next. Most people won’t go to those efforts.

Which means the biggest opportunity in crypto right now is to identify which are the next currencies that will be added to Coinbase. Because as soon as those are added to Coinbase, they’ll be exposed to a huge new pool of investors who are already in crypto and will no longer have a barrier to diversifying their investments.

I don’t know which those will be, but I’d love to hear predictions or thoughts in the comments.

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