Bitcoin is surging. The exchange rate of the leading digital currency broke the $800 mark earlier this week, to reach a two-year high of about $875 today. The all-time high of over $1,100 or even over $1,200 depending on the exchange, may very well be tested soon.
Arguably, an even more important milestone has already been reached. Due to the increased number of bitcoins in circulation, Bitcoin breached its all-time market cap high measured in USD — in several ways.
The Straight-Up All-Time High Market Cap
Probably the bluntest way to measure Bitcoin’s all-time high market cap is to take the total number of coins that have been mined at any given time, and multiply that number by the highest exchange rate bitcoin was trading for at that time on a popular exchange.
By that measure, Bitcoin reached this benchmark on November 25, 2013. Not long before that date, the total amount of coins mined had surpassed the 12 million mark, and had on that day reached about 12,035,000 coins. Meanwhile, the bitcoin price on Bitcoin’s then-biggest exchange — MtGox — topped at $1,242. As such, Bitcoin’s all-time high market cap was just short of $15 million, reaching a total of some $14,947,470,000.
Today, a total of some 16,055,000 bitcoins have been mined throughout the duration of Bitcoin’s existence. And on Bitstamp, itBit and GDAX — some of Bitcoin’s most used exchanges today — bitcoin’s exchange rate topped out at $875. This makes for a market cap of about $14,048,125,000.
While this calculation means Bitcoin’s current market cap is at a three-year high, it still has about 6 percent to go to break the all-time high. Strictly speaking, therefore, there is no record yet.
The Non-MtGox All-Time High Market Caps
However, going by the MtGox exchange rate of November 2013 is probably not the most accurate or fair way to measure bitcoin’s all-time high. Although the specifics are beyond the scope of this article, there is reason to believe MtGox had been cooking the books (at least partially cooking) to artificially boost the exchange rate that month.
Perhaps, therefore, MtGox’ all-time high of $1,242 should simply be ignored, in favor of bitcoin’s exchange rate on a different exchange. This is perfectly doable: While MtGox had dominated the market for years, by November 25, 2013, it was no longer the only exchange with reasonable volume. Bitstamp, BTC-e and Bitfinex were all claiming significant trading volume.
Of these three, Bitfinex reached the highest exchange rate at $1,175 on November 25, 2013. With about 12,035,000 coins in circulation, this makes for a non-MtGox all-time high market cap of $14,141,125,000.
Fast-forwarding to this week, as noted, Bitstamp, itBit and GDAX, saw bitcoin’s exchange rate top at $875, for a market cap of about $14,048,125,000. Less than a percentage point shy of the all-time high market cap — but, again, not a record just yet.
The Weighted-Average, All-Time High Market Cap
Of course, measuring market caps by any single exchange is not ideal either. Prices always deviate from one exchange to the other, and especially so in an immature market like Bitcoin, as well as during times of increased volatility experiencing price peaks or “bubbles”.
A better way to determine an overall exchange rate is to take the average across exchanges, weighed by trading volume. There are several services to weigh these averages, such as Bitcoin Average.
On November 25, 2013, the Bitcoin Average high topped out at $1,163. Multiplied by the roughly 12,035,000 coins in circulation at that time, this adds up to a market cap of $13,996,705,000.
Today, the exchange rate on Bitcoin Average reached $874. With some 16,055,000 bitcoins in circulation, that makes for a market cap of $14,032,070,000.
Indeed, a record breaking, all-time high market cap!
The Non-Artificial-MtGox, All-Time High Market Cap
And perhaps there’s an even better way to measure Bitcoin’s all-time high. As noted, MtGox’ all-time high of $1,242 seems to have been at least partially artificial. It makes sense, therefore, to ignore the MtGox price.
And this could be taken one step further. Since the MtGox price was probably at least partially artificial, other exchanges were most likely dragged along to artificially high prices as well. Traders performing arbitrage between different exchanges would buy bitcoins on Bitstamp, BTC-e or Bitfinex, to sell these on MtGox, artificially driving up prices across the board.
As such, perhaps the peak of November 2013 should be ignored completely. Instead, the MtGox $266 all-time high on April 10, 2013 should be considered the last “natural” all-time high before the price was artificially increased. With about 11,010,000 coins in circulation, April 2013 made for a record-breaking market cap of $2,928,660,000.
From that starting point, and ignoring the November 2013 peak (and the aftermath until the collapse of MtGox,) Bitcoin’s all-time high market cap has been breached several times. The first time was on May 26, 2014, when bitcoin traded on Bitstamp at around $683, with a total coin supply of about 12,820,000, for a market cap of $8,756,060,000. The second time was earlier this year, on June 13, as bitcoin was trading on Bitfinex for $789. With about 15,655,000 coins in circulation, that made for a market cap of $12,351,795,000.
And, indeed, today, as bitcoin traded at $875 on Bitstamp, itBit and GDAX, the market cap broke out to about $14,048,125,000.
The Adjusted-for-Lost-Coins, All-Time High Market Cap
Lastly, some — like Gyft founder and Civic Founder Vinny Lingham — have suggested that Bitcoin’s market cap should be adjusted for lost coins. Lost coins, or bitcoins for which the private keys have been deleted or otherwise lost for good, will never be spendable at all. This means that any “value” these coins hold is lost as well and, therefore, represent no meaningful economic weight.
Unfortunately, it is impossible to determine how many bitcoins have been lost over the years. By simply looking at the blockchain, there is no way to discern between cold storage coins that simply haven’t moved for a while and coins that are actually lost.
Perhaps rough estimates can be made, however. Most coins were probably lost in the early days, back when they weren’t worth much — if anything at all. Then-worthless Bitcoin wallets could have easily been forgotten about and deleted, or otherwise lost over the years.
Based on when the coins were first mined, and how long they haven’t moved, estimates suggest that between 1.5 and 4 million coins have been lost over the years. And this number has probably remained relatively stable: Most people likely started to become more careful about backing up their private keys when bitcoin’s value moved beyond $100 a coin.
So let’s say the total number of lost coins is 2.5 million.
This would mean that on November 25, 2013, there were about 9,535,000 “active” coins in circulation. Multiplying that by the weighed average price across exchanges — $1,163 — adds up to a market cap of $11,089,205,000.
And right now, there should be about 13,555,000 active coins in circulation. Which, multiplied by today’s weighed average high of $874, adds up to a total market cap of $11,847,070,000.
Indeed, another record.
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