My alt analysis — 20 Jun 2022
With the crypto market in collapse there are two things you need to work out:
- What is the floor on Bitcoin?
- What are the floors on the Big Alts?
The ‘floor’ is the price level where prices consolidate before going up again. When you know this, you know when to come into the crypto market again.
If you don’t want to come back into the crypto market again, you were only a gambler and so are best to take your losses and go buy shares [oops, in trouble], property [oops, in trouble], bonds [oops, being killed by inflation]…[PS buy Precious Metals = smart].
- I think the floor on Bitcoin is US$20k. Here. Explanation is previous post.
2. I think the Big Alt floors are about at this level.
The Big Alts are the top 10 ‘credible’ cryptos that are 30% of the market capitalisation. With Bitcoin they dominate the market and, most importantly, the interests of the big money that will drive the market back up.
ONE VIEW. A classic view is that the movement of Alts is tied to Bitcoin. Well they have not been tied on the way up [2020–2021], and on the way down, they have dropped an average of 85% and Bitcoin has dropped 65%.
ANOTHER VIEW. Whilst Bitcoin will lead the market, the Alts will have a different story.
Ignoring stablecoins, exchange coins and payment coins [Litecoin and XRP], the big story behind Alts is Web3 and tokenisation. A story which produced $1.7trillion in value at its peak in Nov 2021.
There is no doubt that Web3 will become a massive new area for tech and value creation YET after all ‘Pioneer’ booms a new sector has a tough ‘shakeout’. And ETH 2.0 will be a Gorilla against all others.
IF you assume that there is true value in this space, like I do. Then you can believe that there will be 100X in token usage producing fees in $100 billion+ requiring a $trn+ in currency. So the combined valued of all currencies is $trn. Not the ‘trillions’ as some predict yet it means this market still has big growth potential. Not 100X, yet 5-10X. For the winners.
Looking at the charts, and comparing them against 2020 floors, each other and Bitcoin, I think that after an average 85% drop from All-Time-Highs, that ETH, ADA, DOT, LINK, & MATIC have reached their floors.
I am not sure about SOL. It could be at its floor or there is another 25% downside. Same with AVAX. They flew so high, its hard to work out were they sit today. A better guess is that they have reached their floor.
Litecoin is always confusing. Does Bitcoin’s gold, need a silver? These stores of value dont need speed as they will never be a retail payment currency. I think there is a market for Litecoin AND, most importantly, like Bitcoin, it needs market cap because it’s a currency. This is unlike say ETH who’s value is determined by underlying user demand for fees.
XRP has too many credibility questions. BNB has credibility questions, a failing general blockchain ecosystem and thus justifying its value based on exchange usage means its 80% over-valued compared to other exchange coins like FTX token. .
The last on my list is Bitcoin Cash which I think has lost the competition against Bitcoin as the use case as a payment currency is lost. Also it has lost the competition against Litecoin as the ‘silver’. Thus I think Bitcoin Cash will be worthless.
As you can read, I think most Big Alts have reached their floor. I think there will be big volatility yet if this level holds, the potential is upside. Keep your eyes on Bitcoin.