Please click below to listen to the 49th episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Consider dropping a like and or a review on iTunes or Podbean if you enjoy the podcast. Comments and critiques welcome.
Oh, Wherefore Art Thou My Alts?
Welcome to Two Minute Crypto. This week focuses on Alt-coins and their evident failure to play in the same field as Bitcoin.
If you hold Alt-coins you certainly won’t have missed the steady bleed-out of value especially in relation to BTC.
Let’s chew through some of the bad news first. In all probability, if BTC rallies to new highs – the vast majority of Alts will lose even more value relative to it and on and on this trend will continue until BTC tops out – perhaps two or more years from now.
Alternatively, should BTC tumble – once again the vast majority of Alts will collapse with it and by more.
A lose-lose situation in the short to medium term.
The smart money as it were is on Bitcoin and rightly so. Alt-coin rallies will be sold as BTC dips look to be bought.
Are all Alts doomed? Of course not. Are most of them terrible investments – yes, indeed, they are.
As a simple rule of thumb for judging the likelihood of a return on an Alt consider where does or will the revenue for that coin or protocol stem from – if you can’t find it after due diligence it’s most likely because it isn’t really there.
Take Binance Coin (BNB) for example – its revenue stream and price supportive factors are readily apparent – exchanges fees, IEO listing usage, and a regular burn cycle reducing the supply while demand has been steady. Even so, BNB has struggled to maintain its highs against BTC. Nonetheless, at this moment in time, there’s a clear value proposition for BNB.
Vechain (VET) with its focus on supply chain logistics and product authenticity has a clear possible revenue model and one that includes the utility token in its operations. Partnering with Penfold’s one of the world’s most prestigious winemakers bodes very well – no guarantees of course but the outlook is currently sound. My sense is that peddlers of super-premium wines across the planet are now wondering why their wines aren’t utilizing this blockchain thing – if only to keep up with the neighbours.
Now let’s take Litecoin – yep -nothing – smoke and mirrors – silver to Bitcoin’s gold – utter nonsense in the long-term. The halvening now behind it Litecoin will struggle to retain value. A test net has no claim to meaningful revenue and sooner or later the LTC penny will drop and the token with it.
Take some time and examine your current Alt-coin portfolio for current or likely future revenue…if you can’t honestly find any, you’re probably looking at a failed investment. Plan accordingly.
Thanks for Listening