Sunday, November 27, 2022

BitTorrent’s Rally

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BitTorrent (CCC:BTT-USD) has risen 2,700% since January. Even in a booming cryptocurrency ecosystem, the rise in BTT is remarkable.

But why has BitTorrent risen so steadily? It’s a difficult question to answer.

The coin itself hasn’t altered much. The Tron Foundation acquired BitTorrent, a long-standing P2P file-sharing service, in early 2019. It pledged to use the token to increase download speeds and network sharing.

No one cared. In 2021, BTT was worth less than a penny.

Now they do. We know they care because altcoins of all stripes have gone insane, and traders speculate crazy. Five months later, the same crypto is worth nearly nothing, at a little over seven-tenths of a cent.

Considering the coin’s quantity, BitTorrent has a significant market value. Predictions for even more tremendous upside defy logic.

Even if I am not a fan of Bitcoin (CCC: BTC-USD) or Ethereum (CCC: ETH-USD), there are valid arguments for both. Other altcoins show promise.

But BitTorrent is bought because it is inexpensive and growing. That can’t last.

Math for BitTorrent

An essential fact about BitTorrent: it has a vast supply. There are already 990 billion coins.

So while the current price of $0.007364 may appear low, BTT is not. Its market cap is over $7 billion.

That supply also exposes some of the BTT price goals as absurd. On the surface, expecting the coin to hit $1 isn’t unreasonable. BitTorrent’s market cap would be close to $1 trillion. The coin market cap is currently $1.1 trillion.

Some sites predict significantly greater prices, such as $5. It may take five years, but we’re still talking almost 68,000% returns and a market worth near $5 trillion.

Last month, the total crypto market cap surpassed $2 trillion for the first time.

What Can it Do?

Like Dogecoin (CCC: DOGE-USD), several cryptocurrencies have price objectives that correspond with round-dollar figures. The supply issue for BTT should make a $1 price target seem foolish.

But so should BitTorrent’s actual use case. There isn’t one right now. Incentives-based ecosystems should enhance download speed.

Of course, that’s the same product that yawned in 2019. Neither does download speed seem a significant issue in an era of gigabit Internet.

Tron claims BTT enables DApps like DLive. But DLive is a third-tier equivalent of Google’s (NASDAQ: GOOG, NASDAQ: GOOGL) YouTube or Amazon’s (NASDAQ: AMZN) Twitch. After the Jan. 6 rioting at the US Capitol, the site removed several right-wing pundits banned from mainstream platforms.

Streamers on DLive are compensated in “lemons” rather than BitTorrent, though DLive does offer staking prizes for BTT.

A Bubble

Not much here. No way a $7 billion market cap can be sustained.

As stated by Mark Hake, CFA, Tron itself has a shady history. Last year, The Verge labeled Tron’s CEO, Justin Sun, the “Hype Man of the Century.” (Sun was previously renowned for spending $4.6 million on a dinner with Berkshire Hathaway CEO Warren Buffett.)

Sun bought BitTorrent for about $100 million in 2018. It’s hard to reconcile that background with BTT’s $7 billion market cap. The token and the business are not the same things, but their monetary worth originates from their practical utility.

Is BTT more than just anonymous piracy? Currently, there isn’t much proof.

So no $1 trillion or $5 trillion market cap. It even opposes the current pricing. The rally has been great, and it doesn’t have to end now. That is, unless something dramatic happens.

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