Opinion The Prospects of the Altcoins in the Wake of the Bitcoin Bull Run

The Prospects of the Altcoins in the Wake of the Bitcoin Bull Run

February 20, 2021

It seems like every new week brings a similar story in regards to the Bitcoin cryptocurrency network. That notion includes the most regular breaking of price records. The same once again transpired in the previous week, slowly lulling everyone into that notion of an endless bull run. However, those with longer memories can clearly remember a similar atmosphere forming in the final months of 2017. Back then, many more certain that this time around bitcoin tokens will simply continue going to the moon. That fantasy abruptly ended in 2018 when the market tumbled down and kept going down for nearly two years. Presently, no one can tell how fast or how soon will this present bull run end.

A big fallout of the same issue, this time in a positive manner, is the altcoin market. The same domain profited greatly during the 2017 rise of crypto prices when practically any talking on the market began generating attention and market capitalization. The same took place no matter how feasible the same token was or what was the prospect of its blockchain network. Instead, money simply got pumped into these altcoins, driving their prices upwards along with the BTC prise rise. At this moment, the situation is someone different from that from four years prior. But, the question still remains – where will the old coin market go in the coming weeks and months of the bull run? More importantly, where will it go once the bull run is finalized?

Absence of Brand New Names

Many critics of the altcoin markets often underline that the issue with these tokens is their abundance and relative obscurity of most of them. 2017 saw this problem in its most extreme manner so far. Back then, the initial coin offering madness fueled a transition of ETH tokens into a huge range of brand-new cryptocurrencies that tried to fill a huge range of niches. From specialized tokens for esports players and fans to scams and doomed to failure projects, everyone and anyone was coming out on the market with their cryptocurrency token back then.

However, several chokepoints slowly sniffed out the oxygen for those ventures. Firstly, the crackdown on ICO did the trick as it took away many clearly fraudulent coin offerings. Most of these were based in China, so the same regulatory action made sure all of them shut down their operations. Secondly, the squeeze from the Crypto Winter put on the financial pressure that took many users from the markets. Without funding, a lot of promising altcoins were shown to be hollow concepts and they simply gradually died off. Today, the altcoin markets have the advantage of being populated mostly by tokens that weathered that storm. This in itself shows a level of market maturity and its ability to auto-regulate itself. That is a huge advantage for this bull run, no matter where bitcoin price continues to go next.

ETH leading the Pack

Similar to the fact that the market is presently much more mature, so is very much true that the present altcoin setup has a very clear pack leader. That is the ethereum network with its ETH token, which stood the test of time in the previous four years. The death of the ICO boom could have severely crippled the ETH outlook for not just the lull of the Crypto Winter, but the entire period after. Here, the tech alternatives that this token provides, especially the potential of building up different networks and smart contracts on top of it, should have been rendered a lot less relevant without the craze of everyone making new crypto networks.

However, ETH managed to find a new tech cutting-edge application purpose, which became the decentralized finance market. Here, at the present moment, the level of development is probably at the highest point out of the entire network ecosystem, apart from the work on the ETH 2.0 gigantic, multi-year project. With the DeFi market only gaining more and more traction, ETH seems to have solidified its position as the tech-diverse alternative to bitcoin. However, there is a problem with that narrative when it comes to sheer price climb that can be expected with not just the ETH token, but all altcoins on the market.

Institutional Investment

The present climb in bitcoin prices, which is well into the 55,000 USD range, has been fuelled by one thing and one thing alone. That is not the tech background of the bitcoin token or its abilities that are somehow different to those from 2017. Also, the number of ordinary end-users has grown, but it has not grown five-fold since the middle of 2020 when the price of the BTC token was around 10,000 USD. Instead, all of these factors are a lot less relevant than the major one – institutional investment.

With companies like Tesla Motors and MicroStrategy investing nearly 3 billion USD, the potential for growth in the domain of crypto prices has been unlocked on an almost unparalleled scale. That money came into bitcoin almost exclusively, with all other cryptocurrencies simply riding on the cocktails of BTC. The same trend will continue for the foreseeable future because it includes a cascading effect of other companies trying their luck in the crypto market, but also hedging against inflation at the same time.

Regulatory Woes

The party in the crypto market is ongoing, but some fear that it might come to an abrupt stop for both bitcoin and the altcoins as well. The reason for this is the fact that regulatory bodies in countries like the US have so far been mute about these developments. But, with governments having zero control over institutional investment into crypto, some believe that the hammer has to come down here sooner or later.

Once it does, if it does as well, the party will be over. That means that the altcoins, with or without institutional backing, will experience the same pulldown as any other digital currency, including bitcoin. If that does not take place, the skies seem bright for altcoins just as much as for bitcoin.