Bitcoin has had a hell of a year. So, why are the altcoins being absolutely obliterated?
During the 2017 crypto bull run, people noticed that the market had started following a predictable pattern.
First Bitcoin would make a move north, then the major caps like Ethereum, Litecoin, and Ripple would follow.
After that it was time for the alts to shine, a period I liked to call ‘sh*tcoin bingo’. Coins you’d never heard of with propositions you couldn’t begin to understand would double or triple in value overnight.
Market commentators with names like MagicPoopCannon would blithely predict that X coin would soon go 5-10x and you know what? They were right.
The subsequent correction was savage. Declines of more than 95% were common. The phrase “bagholder” was invented to describe those of us left holding newly worthless coins.
But when Bitcoin started on its merry way back in March, it looked like everything was back to normal. ETH, LTC, and XRP followed suit and then the alts went bananas.
Bitcoin made another, even bigger move, culminating in the US$13.9k peak. And then…
Oh god the blood
What followed has had all the subtlety and finality of the Red Wedding. Bitcoin went down and so did the alts. Bitcoin went back up and the alts went down. Bitcoin went down again, the alts went down more.
Bitcoin dominance, the proportion of the overall crypto market cap that belongs to BTC, has crossed 70%, a level not seen since you could buy an ETH for US$40.
Bitcoin is pulverising the alts and there’s no respite in sight.
Wheat, meet chaff
In many ways, this has been a long time coming. With almost 2500 coins currently listed on Coinmarketcap, the crypto scene is carrying more dead weight than the Melbourne Football Club.
The problem is that altcoins are infinitely inflationary – anyone can create a new alt and assign it value, meaning that over time any individual coin will be able to purchase less and less Bitcoin.
Time for a hard truth: most alts will never recover.
They will never make new all-time highs as our hands grow sore from high-fiving each other into the sunset.
The crypto markets are maturing and mature markets don’t have space for an endless supply of sh*tcoins being valued solely on hype and potential.
Until individual alts prove why they should be worth anything – a task that legacy coins like Ethereum and Ripple are making headway towards – they will continue to hemorrhage until the vast majority of them are no longer going concerns.
Cryptocurrency has always prided itself on defying market realities. In this case, it seems like the market realities are finally catching up.
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This opinion piece was originally posted on CoinJar’s blog.
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