Why altcoins are not growing after bitcoin

Capitalization

Digital coins have no physical collateral. Therefore, their value is determined by the ratio of supply and demand, and market capitalization is calculated by multiplying the price of the asset by the number of units issued. However, such an assessment of cryptocurrency is not objective enough, and it is illogical to base an investment strategy on it:

• Developers often “freeze” a certain share of coins, releasing only a part of them to the market. For example, the creators of Ripple initially blocked 53.6 billion XRP out of the total issue of $100 billion, and then gradually brought them into the public domain.
• The mechanism of creating digital currencies assumes that most of the coins will not be traded on exchanges, but will remain with investors as a long-term investment. Holders of STEEM coins use them to vote for the best content, and ASAP holders participate in the management of the protocol.

To estimate the real capitalization of an altcoin, you need to consider the number of users on the network and the number of transactions. Tracking these indicators, you can determine the growth or fall of interest in digital currency.

Features of the digital asset

Another factor that stimulates the increase in demand for cryptocurrency is the possibilities of its application. In 2021, Shiba Inu (77909077%), Terra (15491%), Solana (11879%), Polygon (10742%), and Ethereum (550%) coins showed the highest growth.

The ETH blockchain is home to the most profitable sectors デファイ そして エヌエフティー in 2021. Users buy etherium to participate in transactions involving decentralized assets and non-mutually exchangeable トークン. Between January and December, the main altcoin team launched 2 major updates (Berlin and London), which are part of a plan to transition the network from プルーフ・オブ・ワーク to Proof-of-Stake. After the activation of the next ハードフォーク in August 2021, Ethereum has another feature. The platform regularly burns coins, reducing issuance and increasing the value of the asset.

Other altcoins on the leaderboard are also pushing breakthrough technologies:

• 柴犬 is a decentralized ecosystem with a cryptocurrency exchange and NFT, fully community-driven.
• Terra conducts fast, secure, and cheap payments using ステーブルコイン.
• Solana builds a scalable and fully secure platform for the next generation of decentralized applications (dApps).
• ポリゴン increases bandwidth on the Ethereum network.

Notoriety

Most private investors follow the quotations of the popular koins and invest in them. The popularity of BTC, ETH, BNB, SOL and other top projects reduces the risk that a coin may suddenly depreciate. This strategy is suitable for beginners, but limits investors in decision-making. Often, little-known altcoins remain undervalued. If there is a serious team behind the project, which is developing a potentially in-demand product, there is a chance that the asset will rise significantly in price.

Information field

According to Yale University (USA), the correlation between positive tweets about bitcoin and the cryptocurrency market is 80%. Analysts say that a 1% increase in the number of posts with the word Bitcoin is accompanied by a 2.5% increase in the price of the asset in the week following their publication. The loud news can rapidly change the course of the main cryptocurrency and, accordingly, affect the entire market.

In 2021, Ilon Musk gained a reputation as a manipulator who is able to collapse or raise the rate of koins with his tweets. In January, the entrepreneur and developer added the hashtag #Bitcoin to his profile. Within hours, the price of the asset increased by 19% (from $32.3k to $38.1k). In May, Musk said that Tesla was stopping the sale of cars for BTC due to the unecological nature of the cryptocurrency. The market reacted with a 10% decline in the asset’s rate (from $53.1k to $47.8k).

The rapid growth of Dogecoin in 2021 began after the head of Tesla and SpaceX mentioned it several times in his tweets. From January to December, the asset grew by 5771% (from $0.0049 to $0.19).

Positive investor expectations

According to Glassnode monitoring data, investors continue to increase BTC volumes at the end of 2021, despite a 30% correction of the asset after reaching an all-time high of $69 thousand. Nikita Soshnikov, head of the Alfacash exchange service, says that this indicates high growth expectations for the digital currency. According to the expert, many market participants expect to increase investments 5-10 times at the level of $20-30 thousand. Investors will start fixing their profits at $120 thousand. Many BTC holders believe in an increase to $1 million.

結論

In 2021, investors’ money is concentrated in Bitcoin. The dominance of the main market asset is stably held above 40%, so altcoins are not growing. Despite the current correction of BTC, analysts forecast the rate to rise to $100 thousand in the coming months. And only after updating the next historical maximum will the long-awaited “altcoin season” come.

よくある質問