Because even the oldest cryptocurrencies have only been in existence for roughly a decade, many elements of the industry are untested. That has led to ample opportunities for savvy investors to rake in a tidy profit, particularly as currencies like Ethereum and Bitcoin have rallied considerably in the past few months. However, it also means that another pool of investors harbors concerns about a cryptocurrency bubble. There are arguments on both sides of the debate, but when the cryptocurrency market tumbled last week thanks to a widespread correction, it set off alarms for many analysts. Bitcoin, Ethereum, Ripple, and several other cryptocurrencies saw their prices drop by significant percentages in just a single day, prompting some to speculate that the fantastic digital currency rally might be over. Now, more than a week later, a number of these currencies have bounced back to levels approaching their earlier heights.
More Than 90 Top Cryptocurrencies Rebounded
According to a report by CoinDesk, over 90 of the leading 100 cryptocurrencies rebounded in the early part of last week after the major market correction on June 15th. At the same time, the rally coincided with an increase in market capitalization for the industry. After dipping below $100 billion during the correction, the total market cap for the industry approached $108 billion early in the week. The market cap is still below its all-time high of $117.2 billion from June 12th of this year. Nonetheless, the trend seems to be pointing toward quick growth: the total cryptocurrency market cap has gained more than 500% year-to-date as of the beginning of the week.
Fears of a Bubble
Some analysts are still concerned with a bubble. Bitcoin is sometimes cited as evidence that the industry has grown beyond its means and too quickly. The prominent currency has almost tripled in value since the beginning of 2017, reaching new highs several times and smashing through the $3000-per-coin barrier just weeks ago. During the market correction, the value of a single Bitcoin fell by hundreds of dollars. As of this writing, a Bitcoin is valued at just over $2450; while this is not as high as the record value, it is nonetheless a rebound from last week's lows.
Fears over a possible bubble and the long-term health of the cryptocurrency field have blocked many financial institutions from making investments in the area. Still, the customer base for many of the leading currencies has grown considerably. In fact, Bitcoin's user base and volume of transactions has grown so much that it has caused difficulties with the infrastructure of the cryptocurrency itself, leading to massive wait times for transactions to clear and higher fees. While the debate over how to remedy these issues continues, the growth of the cryptocurrency industry seems unimpeded.