The Crypto Bull Market Came Back Too Soon
Unpopular Opinion: Bitcoin’s Rise will Wreck Altcoins
Disclaimer: The below references an opinion and is for informational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
New People Are Coming To Crypto
If you are reading this, you most likely have some exposure to crypto already. You’ve made your decisions about consensus algorithms like Proof-Of-Work and Proof-Of-Stake and you know how you feel about Smart Contracts and Layer 2 protocols. You chose your coins already, and you’ve been an advocate through thick and thin. Congratulations! We made it to the other side of 2018.
If you are new to crypto, just buy Bitcoin. Don’t get fancy. Don’t overthink it. Don’t hate that you are buying higher than your friend that’s been telling you to buy for the last 4 years. There is a reason Bitcoin is Number #1. Do the safe thing and start with the King. Buy and HODL!
Common Terms
Bitcoin(BTC): Best of The Coins
Altcoins: Every other coin
Moon(ing): A massive price increase
HODL: Hold on for dear life
DApp: Decentralized application (programs built in crypto)
The Crypto Traders
Traders are back in their happy place with wild mooning valuations and erratic volatility. In the exciting and dangerous world of Altcoinland, traders with discipline AND competent due diligence can hope to find fantastic Bitcoin returns. Yes, you read that right, most altcoin traders do it so they can grow their Bitcoin portfolio.
Some altcoin bagholders might finally move over to Bitcoin as they watch its market dominance surge above 60% for the first time since December 2017
The Main Issue
The problem with the bull market coming so soon is that the “Good” ones haven’t had enough time to build, and the “Bad” ones have a new batch of people to sell to.
Existing smart contract platforms like Ethereum and EOS have the headstart on building, but the rest of the world doesn't know that. The killer DApp might be around the corner, but it isn't here today.
In my previous article “How to Win in the Crypto Bear Market”, I concluded that
Altcoin projects that survive will be the real winners. Now that the “ICO party” is over, there will be higher expectations investors will have for projects moving forward. There will be a requirement for strong and relevant teams, not just random Nobel prize winners or celebrities. Whitepapers alone will no longer be sufficient in raising millions in capital.
But when you look at Algorand, I’m pretty sure the evaluation process hasn’t reached maturity yet.
Before we get into the thick of things, I’d like to share that I currently work for Ethereum Classic Labs and hold BTC, ETH, ETC, (and some trace amounts of BCH and BSV I can't get rid of).
Bad Projects Thrive In Bull Markets
Now with more attention and many, naturally the scammers will come back to play. Not all of the projects have bad intentions (at least I hope not), but many are misguided in their vision and execution. We will see a flurry of new coins rushing in and they will rocket in price.
- Lack of Popular Understanding
Terms like POW, POS, Fixed Monetary Supply, Turing Complete, TPS, and so on have become 2nd nature to the entrenched crypto crowd. The new crowd doesn't have the background to translate what is possible and what is not. There will be promises from new coins (just like the ones made by many existing altcoins) that are simply not possible. It’s easier to sell a bigger dream.
- Lack of Morals
The projects with no morals flourish in this market when there are new buyers that don’t have experience in evaluating projects. They have no reputation and nothing at stake. Many of these projects will be old players repackaging their last scam. I was approached yesterday by a project to be the “white face” and that it was “free money” for me. They obviously didn’t read this article I wrote about detecting scams (it will be extremely relevant for the times coming ahead).
I have not endorsed any project. If you see my picture, please let me know.
- Shiny New Toys
The latest isn’t always the greatest. Bitcoin is the oldest at over 10 years old now, but that won't stop most from thinking that the new one has “better technology”. FOMO is highest with the new coins because of the feeling you are “getting in on the ground floor”.
- Marketing Advantage
When you take all of the above together, you get a significant marketing advantage that is hard to beat. These projects will misrepresent (or misunderstand) what they are capable of doing. The media is more likely to cover Facebook’s Libra coin than it is the newest developments of IOTA.
Good Projects Lose The Benefits Of A Bear Market
The existence of shitcoins takes away from solid projects that were flourishing in 2019. There will be no more time to relax and build peace. Competition for awareness and resources will be fierce, and the false promises of unbuildable tech will outlive blockchains built in reality.
- Survival Through Conviction
The remaining projects are alive because they have something going on or at least believe it with all their being. Some projects even died and came back to life because of that conviction. Developers have been underpaid, but stuck through things based on a belief in what they were building. That advantage is gone when easy money comes pouring into the crypto space.
- Focus on #BUIDL
During the Crypto Winter, the focus went away from the marketing and trading frenzy and on to protocol and DApp development. Now that the bull market has returned, time will need to be spent away from this concentration on technical progress. When the competition is about getting people attracted (marketing) vs building real use-cases (development), the good projects lose.
- Moldy Oldie
During a Bear Market, the Lindy effect is a big benefit. The longer a project has survived, the more battle-tested the ecosystem is, the higher the likelihood it will be around tomorrow. Unfortunately, this isn't something traders or the new crypto crowd will care about.
“That project survived 6 years — why hasn't it beaten Bitcoin in all that time? Where are the DApps?”
That is the misconception that will hurt many existing altcoins. Hash rate, decentralization, and immutability are concepts that mean little to this bull market.
- Lost In The Noise
It’s hard enough competing against 200+ projects for attention in the crypto industry, now it will be seemingly impossible for the underfunded. All ad space will cost more, there will be more attention to newer projects, and even the most popular projects today will take a back seat to brand name entrants like Facebook.
- Resources Will Be More Expensive
It’s not only ad space that will cost more. Developers are still in short supply and now there will be more money to compete for their time. Some projects will have more capital thanks to the pump in ETH prices, but it won't be enough to counter the increased costs. Retaining talent will be extremely difficult, and retraining junior blockchain developers on the specific nuances of existing projects will be a 3–6-month time investment.
Trends I Expect To See Over The Next 6 Months
Lower Priced Coins In The Top 20 Marketcap List Will Surge
Most people still don’t understand the difference between price-per and marketcap. The hedge fund manager that kept telling me Ripple (XRP) will moon from $0.50 to $1000 in a flash didn’t understand marketcap — that implies a $40,000,000,000,000 marketcap (for your reference, that would be equivalent to 1 Bitcoin at $2,225,000)
Really Big Celebrities Will Be The New CryptoInfluencers
This time there will be a clear line between shilling and informing (but will it even matter?)
Many Brand Name Companies Will Launch Their Own Coins
Facebook’s Libra is only the beginning.
The IEO Will Be Abused Like The ICO Was
Initial Coin Offerings turn into Initial Exchange Offerings. I believe Binance is the only safe place to participate in them today. I don’t know of another exchange that would be incentivized to do the correct due diligence on new projects. Most will charge large fees to be listed and some will offer “Market Making” services to pump these new IEO’s at launch.
The Shenanigans Of 2017 Will Come Back 10-fold
At its peak, John McAfee tattoed his back with Skycoin. Maybe Trump tattoos his face with Tron.
For Those That Want To Venture Into Altcoinland
If you must move into altcoins (and if you are new to crypto, just ignore this entirely) these are the ones to keep an eye on — primarily based on their performance over the last few days. The filtering I used was based on a minimum trade volume and I selected the few coins that are up in value relative to BTC. If there is enough interest, I’ll do a breakdown of these and a few more in a future article.
Performance based: QTUM, Tierion, NEO
News based: Chainlink, Ethereum Classic
