Opinion: What has Changed for Altcoins Since 2017
Talks of Bitcoin’s rising dominance to a point of triggering a general altcoins bull season are becoming more frequent. The dominance level has already surpassed the 65% range which got altcoins running the last time to, particularly with the influence of ICOs, swell the total crypto market by hundreds of billion dollars.
An alts season will stem Bitcoin’s dominance level which will delay mass adoption if it persists – altcoins, not Bitcoin, matter for mass adoption to create a stable market. Also, an altcoins season will need real adoption – not seem to be near going by market outlook – to trigger value increase. However, as the market is seemingly focused on Bitcoin and its pending block reward halving which will impact overall, a lot has changed in the technology realm of altcoins since 2017 to guarantee another bull run would play out soon or repeat exactly like it happened then.
Ethereum vs. other blockchains duet coming
The heavy reliance on the Ethereum network played a big role in the past as majority of ICOs were held on the platform. That is no longer the case. Unlike 2017, the number of ICOs being conducted generally has dropped drastically forcing a sell pressure on its native asset, ether, to push its value down.
Though Ethereum still has the most developers, partnerships, network after Bitcoin etc, its top position has since been challenged by other blockchains especially from Asia and series of IEOs held on exchanges like Bittrex and Binance.
Vitalik Buterin also recently cited scalability as a big bottleneck as the Ethereum blockchain is almost full. A bet on whether Ethereum will be able to solve its scalability issues in the long term will either leave most of other blockchains with less to do or see projects migrate over to other blockchains probably for their higher tps or lesser transaction fees.
Token economics matter
The token economics of any serious crypto/blockchain project should have helped worked out a clear model for their token’s utility – market use for a purpose that creates demand – by now. The next five years should enable such projects to capture their set markets, generate revenue and be assessed based on their performance. Unlike the last two years when all most projects had were ideas on whitepapers, now they have a community to build, a product to develop and a real purpose to pursue.
Projects with good utility models will always have less risks for investors especially if their usage keeps increasing with time to guarantee sustainable value. This is crucial as investors in the space are smarter than in 2017 with no new money flooding the market . Also, all eyes are on existing projects that have not been appropriately tested in the space during the last spike as they stand a better chance of success in the long term over those that only thrived on speculations.
Altcoins diversification now gets a rethink
Since the end of 2017, most altcoins have lost about 90% of their value. By 2018, the market supposedly started purging itself of projects without solid real world usage. A year and a half on, the altcoins bear market continues with most of them struggling including some that are considered to be good projects. The prolonged bearish state has enabled many investors to accumulate as they pick and stay with whatever new project they want.
It offers a section of the crypto market the opportunity to channel more of their investment on a few key low cap projects for cheap and on a fail-big or win-big basis. This investment strategy is to help gain higher returns – if it wins – while diversification is to preserve gained wealth later.