Are Altcoins on the path to extinction? Analysts on both sides of the issue

Are Altcoins doomed? Bitcoin pioneer and sidechain developer says ‘Yes’

The crypto financial press has been inundated with recent articles discussing Bitcoin dominance and how it might be sounding the death knell for Altcoins. An Altcoin death narrative seems a bit extreme a position to take at this juncture in the crypto evolutionary cycle, but authors are speaking in terms like “survival of the fittest” and the prevalence of a “dominant gene pool”. Are these titles just “click bait” or is there any real substance to the recent arguments supporting a supposed Altcoin “extinction”?

The “dominance” debate has been a recurring theme in 2019, but it generally recedes when Altcoins recover a bit in the market. Altcoin hodlers have been disconsolate of late, however, because an oft-repeating pattern seems to have broken down. In 2018, when Bitcoin stumbled, consolidated, or gently pulled back from previous gains, Altcoins would suddenly be in favor for a period of time when investors’ tolerance for risk had increased. These brief surges were nicknamed an “Altseason”, upon each occurrence.

Bitcoin dominance has soared in 2019, rising gradually from 50% to above 70%, the highest recorded value in 29 months. This sudden achievement of a new milestone rekindled the old debate of just how high will this measure go? A few analysts are actually predicting a return to 90%, as it was back in 2015, well before the advent of the 2017 flood of crypto token development projects. For analysts that focus on the “Top Ten” programs, BTC already commands an 80% dominance factor, which Anthony Pompliano believes could ratchet up to as high as 95%.

Before we get too caught up in a “death spiral” narrative for Altcoins, we should take a moment to remember that Bitcoin gains in market share do not necessarily mean that Altcoins are dying. Many other tokens have experienced impressive gains, while others have also gained, but not as impressively as BTC. Upon further analysis, Altcoins typically fall within three categories – succeeding better than BTC, succeeding less than BTC, and failing. Lumping every alternative token program together for review purposes can lead to misleading conclusions about the general health of all things crypto.

The debate, however, is raging at the moment, with both negative and positive spins expressed on Twitter or in private interviews:

Negative Opinions about Altcoins

  • Peter Brandt: “99% of cryptocurrencies will be forgotten five years from now.”
  • Max Keiser: “Alts never coming back… Sorry.”
  • Anthony Pompliano: “Bitcoin dominance will only continue to gain steam.” (NewsBTC)
  • Adam Back: “Altcoins’ previous supremacy was a temporary feature of the cryptocurrency space. It’s a reversion to mean.” (CoinTelegraph)

Positive Opinions about Altcoins

  • Binance Research: “BTC dominance will go back down to the 50-60% range.”
  • Willy Woo: “Into early-September, altcoins were heading into a region of support at long last.” He adds that the market cap dominance weekly chart is headed into an oversold region, more so than ever before in history, thereby suggesting that an altcoin revival may be imminent. (NewsBTC)
  • The Crypto Dog: “The market capitalization of cryptocurrencies sans Bitcoin is about to break out of a descending wedge.” (NewsBTC)

Can both camps be correct? Yes, if it is only a matter of timing. As many consulting firms postulated at the beginning of this year, many questionable crypto startups could fail this year, if they could not produce substantive results, i.e., use cases that could command attention in the marketplace. Investors are also becoming more discriminating, digging a bit deeper when evaluating the Altcoin space before staking a position. A “shake out” does need to occur, which augurs well for more Bitcoin dominance, but only time will tell.

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