In case you haven’t noticed, cryptocurrencies are smoking-hot once again. This past weekend, the combined market cap of the more than 8,400 investable crypto tokens surpassed $1.5 trillion. That’s almost double the market value of the previous cryptocurrency peak in January 2018.
That Bitcoin (CRYPTO:BTC) is leading the way should come as no surprise. The largest and most popular digital currency came within $500 of the $50,000 mark on Feb. 14, and accounts for $915 billion of crypto’s $1.5 trillion valuation.
Bitcoin continues to gain attention for its growing levels of adoption. For instance, Tesla Motors recently bought $1.5 billion worth of Bitcoin to hold on its balance sheet, and plans to accept Bitcoin as payment in countries where it’s allowed by law. Also, Mastercard announced last week that it would begin supporting select digital currencies, including Bitcoin.
The world’s largest cryptocurrency is also often lauded for its scarcity. No more than 21 million Bitcoin tokens can be mined, which makes it a perceived hedge against the ever-rising U.S. monetary supply. As the true value of the U.S. dollar declines, it’s believed that Bitcoin will appreciate.
Over the trailing three months, Bitcoin has nearly tripled (197%), which is a 187-percentage-point outperformance of the benchmark S&P 500. Believe it or not, this 197% gain pales in comparison to the returns a handful of other popular cryptocurrencies delivered over the past three months.
Over the trailing three months, cryptocurrency Dogecoin (CRYPTO:DOGE) has run circles around Bitcoin, with a return of 2,330%. As of this past weekend, it had become the 12th-largest digital token by market cap ($7.5 billion).
If you’re wondering what caused Dogecoin’s recent monster rally, look no further than Reddit and Twitter, where it’s gathered quite the following. Retail investors on Reddit’s SatoshiStreetBets chatroom have continued to pump up Dogecoin. Elon Musk has also expressed his support for the oddball cryptocurrency on a handful of occasions in recent weeks.
What’s crazy is that Dogecoin was created in 2013 as a joke in a matter of hours by engineers Billy Markus and Jackson Palmer. Palmer thought to combine two of the most buzzworthy things on the internet at the time: cryptocurrency and the Doge meme featuring a Shiba Inu dog. This joke has now become a full-fledged fear-of-missing-out (FOMO) opportunity for retail investors.
Unfortunately, there doesn’t appear to be anything unique about Dogecoin, other than its cult-like following. These gains probably won’t prove sustainable, and FOMO investors will be crushed.
Unlike Dogecoin, there do appear to be tangible reasons behind the 766% rise in cryptocurrency Cardano (CRYPTO:ADA) over the past three months. In particular, three projects or events stand out.
Probably the most important catalyst of the bunch was the launch of Shelley in late July (the engineering team has interesting poetic names for each of its upgrades; the last one was dubbed Byron). Shelley is designed to increase the number of nodes that network participants run. Without getting too far into the weeds, more nodes mean more decentralization and improved security on the Cardano network. Prior to this July launch, Cardano averaged 1,500 to 2,500 daily transactions. It’s now averaging more than 25,000.
Full story on Fool.com