Crypto Market Capitalization Review (Dec 2020)

Changing things up a bit this year as I previously said so really focusing on the Crypto Asset market and its moves. Dec 2020 was surely one to remember as the Market Capitalization started to knock on the door of its all time high around $800 billion. It has been almost three years for this to come back to these levels after a nasty bear market which surely shook the weak hands away from the market.

Source

What is interesting this time around is that the composition of the capitalization has changed quite a bit this time around. While bitcoin remains King with its dominance, we now see a large number of projects providing utility and thus value to the asset class. Decentralized Finance (DeFi) seems to be the biggest driving force of this as Ethereum continues to outperform as record staking continues to attract capital in search of higher return.

The question remains if this will be sustainable as valuation nor longer seems to be an issue for many asset classes as seen in the traditional markets of stocks and bonds. Whether valuations will revert to a mean is yet to be seen but we no longer that volatility and irrational markets can persist for longer than investors expect. This even has me looking at taking advantage and rebalancing my portfolios across all asset classes as I focus on my personal finances for the long term. Take profits to pay down debt may be a good way to hedge any potential headwind that may occur in 2021!

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