It hasn’t exactly been the great crash of ’29, but recently there has been a lot of red on Alt Street.
The pain has been particularly acute for coins that were traded heavily a few short days ago but are now trying to survive on diminished Bitcoin.
When the BTC volume dries up, altcoin prices tend to shrivel almost instantly.
This recent lull has been no expection.
There are numerous theories about why altcoins have been beaten up so badly lately. One plausible theory centers around the idea that large ICOs - most notably Ethereum - have drained a lot of investment capital from the sector. Even worse for alternate projects, the Bitcoin was not recycled, but was rather converted into fiat. This money is now gone from the sensitive alt trading ecosystem.
There also could be a lack of ‘new blood‘ due to the persistent negativity and issues surrounding cryptocoins. Sentiment has turned south with many so-called ‘enthusiasts‘ now labeling all altcoin projects as ‘scams.’
Certainly scams come with the territory in unregulated markets. The ‘Summer of Scams‘ has taken its’ toll on the innocence of formerly wide-eyed traders who, after having been burnt to a crisp, have arrived at the reckoning that most altcoins follow a predictable pattern of pump and dump.
Freedom Isn’t Free
Unregulated markets, aka ‘free markets‘ do not represent freedom without limits. Instead they represent a choice between several devils. We all know the stranglehold that regulation and centralization wreak upon a financial market. Not having any regulation unleashes similar troubles, but at an accelerated pace. There’s a certain sick desperation in the alt markets due to the lack of regulation.
Most people know that the alt markets will not last for long in their current form. This knowledge has created a feeding frenzy of altcoin launches and schemes designed to get Bitcoin at all costs before the whole thing crashes down.
When the general markets dump, all coins go right down with it. This downward pressure means its tougher for any individual coin team to prosper. What’s bad for the general market is bad for us all so to speak.
It’s Always Darkest Before The Dawn
That said, we could literally be seeing a case of ‘it’s always darkest before the dawn.’ The huge amount of capital invested in altcoins this summer should start reaping harvest soon. Advancement in core protocols and technology can help move the entire scene forward rapidly.
Fall and Winter could very well usher in a Golden Era of Altcoins. If the new tech blossoms to the point where people actually use it, the future is very bright indeed. If the whole scene stays mired in scammy coin launches, overpriced ICOs, and infighting, there is a chance that the downward movement could continue unabated.
The size of the ICOs has become too large for an unregulated market. Crowdsourcing unproven business models is a huge risk, and makes this a vector that will undoubtedly attract attention from the wrong circles. When the dollar amounts hit large enough numbers and enough victims are involved, federal regulators in the United States will step in. They always do. When this happens on Alt Street there will be much wringing of hands and gnashing of teeth. At that point, though, can anyone actually claim surprise?
In any event, these are ‘interesting times.’ Upheaval and chaos could help create the next major currency. After all, a gem is nothing but a rock that has been polished due to copious amounts of pressure. Out of this current altcoin pressure cooker a new monster disruptive technology could very well emerge.
Thanks for stopping by and reading. What factors do you think are causing the recent meltdown? Let us know in the comment section.