Total crypto asset market capitalization surpasses $2 trillion, Bitcoin opens the door to a new world

OKX real-time market data shows that on the evening of April 7, Bitcoin experienced heavy volume decline, falling as low as $55,611.7 USDT. From a daily chart perspective, Bitcoin has posted two consecutive bearish candles. Although upward momentum appears insufficient in the short term with increasing expectations of a correction, from a long-term perspective, the investment allocation attributes of Bitcoin and cryptocurrency continue to increase. In particular, Q1 cryptocurrency fund inflows reached a historic high of $4.5 billion, breaking the Q4 2020 record of $3.9 billion, demonstrating that the cryptocurrency market's move toward mainstream is actively unfolding.

Just two days ago, on April 6, CoinGecko data showed that the total cryptocurrency market capitalization successfully surpassed $2 trillion, up 163% since the beginning of the year. Compared with the previous bull market peak of $850 billion, the total cryptocurrency market capitalization has increased by nearly 140%, highlighting the remarkable prosperity of this bull market.

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Among this, Bitcoin accounts for half the market with a market capitalization exceeding $1 trillion. Data shows that gold's total market capitalization is approximately $10-11 trillion, meaning Bitcoin's market capitalization has reached one-tenth that of gold. Since gold broke through the $2,000 mark in early August 2020 and reached historic highs, it has entered a corrective trend. As of April 7, gold has fallen nearly 15% from its high.

In comparison, Bitcoin has risen nearly 400% since early August of last year, delivering exceptional performance. As institutional and retail investors have increased their investment demand for Bitcoin, various indicators suggest that Bitcoin is gradually moving from the periphery of global financial markets toward the mainstream.

Altcoin season sees total cryptocurrency market capitalization exceed $2 trillion

In the six months since the bull market began, the total cryptocurrency market capitalization has grown nearly 475%, surpassing the $2 trillion milestone on April 6. As the undisputed leader of crypto assets, Bitcoin saw its market capitalization surge from $199.3 billion on October 1 last year to $1.0843 trillion on April 7, an increase of nearly 450%. It's evident that the surge in total cryptocurrency market capitalization has been primarily driven by Bitcoin's rise.

Currently, Bitcoin accounts for 54% of the total cryptocurrency market capitalization, while Ethereum accounts for 12%. XRP has returned to the fourth position by market capitalization with a 2% share after surging over 50% in recent days. As of April 8, the top five cryptocurrencies account for 73% of the market share.

According to TradingView data, since Bitcoin began its upward trend in October 2020, its share of the global cryptocurrency market capitalization rapidly increased from 59.12%, reaching a high of 72.56% on January 2, 2021. Since then, Bitcoin's dominance has steadily declined, recently touching 56.98% (Note: some data variation exists across different websites).

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From January 2 to April 7, Bitcoin's market capitalization climbed from $545.6 billion to $1.0843 trillion, doubling in value, yet its market share has steadily declined, dropping 15.49%. This indicates that Bitcoin's dominance is continuously diminishing and market focus is shifting.

Historical data shows that when Bitcoin prices rise, altcoins often follow suit, and when Bitcoin reaches historic highs and consolidates within a predictable range, altcoins' exchange rates against Bitcoin surge rapidly—this is what's known as "altcoin season."

Blockchain Center provides a reference indicator: if 75% of the top 50 tokens outperform Bitcoin over the previous quarter (90 days), it means altcoin season has arrived. By this measure, we are currently in altcoin season.

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CoinMarketCap shows there are currently 9,165 tradeable cryptocurrency assets, whereas this number was under 5,000 just one year ago. Amid the cryptocurrency wave, DeFi, NFTs, the Polkadot ecosystem, storage, and other concepts have flourished and entered a phase of rapid development.

Take DeFi as an example: its total market capitalization surged from $15 billion on October 1 to $108 billion recently, growing 620% in six months.

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Year to date, DeFi's market share has also risen from a low of 2.46% on January 9 to 5.3%.

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In terms of NFTs, their market capitalization exceeds $27.6 billion, accounting for 1.4% of the total cryptocurrency market capitalization. Leading tokens in the NFT sector, such as CHZ and ENJ, have risen 21-fold and 15-fold respectively since the beginning of 2021.

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In 2021, major NFT platforms also experienced a quantum leap in user numbers and trading volume.

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Regarding the Polkadot ecosystem, with the Rococo testnet operating well recently, combined with expectations for Kusama and Polkadot parachain launches and upcoming slot auctions, the Polkadot ecosystem remains in a state of持续 speculation. KSM has risen over 570% from $68 at the beginning of the year to $460 recently, while DOT has also gained over 4x from $8 at the beginning of the year to its current $41.

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Driven by exchange public chains, DeFi mining, and Web 3.0 expectations, OKTC's native token OKT has also risen accordingly. OKT gained 51.95% last month and has risen 50.78% since the beginning of this month, touching a historic high of $233 on April 6. From the low of $33.9 on February 8 to the current $225, OKT has risen 564% in two months.

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As a result, OKB also achieved three consecutive monthly gains, rising nearly 160% from $7.55 on January 1 to $19.49 as of April 8.

It's evident that with altcoins exploding and reaching historic highs, combined with Bitcoin consolidating at elevated levels, these factors have driven the total cryptocurrency market capitalization to surpass $2 trillion in this round.

Bitcoin's total market capitalization challenges silver—how far from gold?

Although indicators show we are in altcoin season, looking at the previous bull market, after altcoins ran wild, the cryptocurrency market gradually entered a bear market. Therefore, many worry whether this bull market has reached its end. The answer is clearly no, because this bull market has seen significant changes in terms of background, driving forces, and ecosystem implementation.

It's well known that both gold and Bitcoin have certain value as hedges against inflation risk. Affected by the pandemic, global economic growth has slowed, and central banks have implemented extremely loose monetary policies, raising inflation expectations in financial markets. In an environment of high inflation and low growth, to avoid erosion of nominal principal and pursue higher returns, investors' demand has evolved from hoarding cash to demand for gold and Bitcoin.

However, the reality is that since Q4 2020, gold and Bitcoin have shown clearly divergent trends, sparking market discussion about whether Bitcoin is becoming a strong "competitor" to gold.

Gold began an upward trend after the global liquidity crisis eased last March, reaching a historic high of $2,000 in early August 2020, but has been declining since. Year to date, gold's investment return is -10.17%.

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In stark contrast, Bitcoin's price trend has risen nearly 4-fold since early August last year, touching a high of $61,829, with a year-to-date return as high as 95.66%.

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This Bitcoin surge is closely related to the enthusiasm it has stirred in institutional circles since October. After Bitcoin halving, supply decreased while institutions significantly increased their Bitcoin holdings. With demand exceeding supply, a substantial price surge is clearly to be expected.

OKLink data shows that as of April 8, the total value of institutional BTC holdings is $27.936 billion, accounting for 2.62% of Bitcoin's market capitalization.

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Unlike the previous bull market where institutions grew more skeptical as Bitcoin prices soared, in this bull market institutions' recognition of Bitcoin has continued to increase. Additionally, regulatory attitudes toward Bitcoin have also shifted.

In February 2021, the world's first Bitcoin ETF was approved, and this Bitcoin ETF now manages $1.19 billion in assets, growing 67% quarter-over-quarter. The improvement of various investment tools like Bitcoin ETFs provides a more compliant avenue for funds to flow into the Bitcoin market.

As global recognition of Bitcoin strengthens, more institutions and individuals are beginning to accept Bitcoin payments. Tesla announced it would accept Bitcoin payments, Mastercard indicated it would enable direct cryptocurrency payment functionality in 2021, and Visa's CEO directly stated that cryptocurrency will become "extremely mainstream" within the next five years.

Digital asset management company CoinShares noted in its latest report that Q1 cryptocurrency fund inflows reached $4.5 billion this year, a historic record, approximately 11% higher than Q4 2020.

CoinShares CSO Meltem Demirors stated that gold ETPs saw $20 billion in outflows over the past two quarters, while cryptocurrency ETPs saw $7 billion in inflows, indicating that investors are continuously increasing their investment allocation to Bitcoin and cryptocurrencies compared to gold.

From Infinite Market Cap's official website, gold currently ranks first among global assets with a total market capitalization of $11 trillion, while Bitcoin ranks eighth with $1.06 trillion. The gap to silver, which ranks one place ahead, is $321 billion. Based on Bitcoin's current circulating supply of 18.6768 million, when Bitcoin breaks through $74,500, it will surpass silver's total market capitalization.

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JPMorgan has stated that as millennials become a more important component of the investment market and they prefer "digital gold" over traditional gold, Bitcoin could surpass gold.

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Indeed, as "investment queen" Cathie Wood said, a $1 trillion market capitalization is nothing—Bitcoin will far exceed this level in the future. Everything is just beginning.

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