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Bitcoin recently exploded above $ 13,000 and came in dollars from setting a higher high and confirming a new bullish trend. Altcoins have also not responded, however, and a cryptocurrency capital manager has a theory as to why.
Su Zhu believes that since most altcoins failed to deliver on their promises three years ago when Bitcoin breaks into a new bull market, newcomers and last-cycle investors won’t be fooled that easily again.
Su Zhu: Crypto Newcomers Won’t Fall For Altcoin’s “Failed Promises”
During the 2017 crypto bubble, Bitcoin which soared to over $ 20,000 caused widespread FOMO from retail investors. As the top cryptocurrency was trading well above $ 10,000 at that point, smaller investors who wanted to own a whole coin or find the next Bitcoin have turned to altcoins like Ethereum, XRP, Litecoin, and more.
Illiquid and low-market capitalization assets began to explode in valuations as money flowed in without thinking twice about what it was and whether it was worth. What he had was a promise.
Related reading | Bitcoin’s overwhelming dominance could decimate altcoins until the first quarter of 2021
More and more promises poured into the market to capture the incoming wave of money, and an ICO explosion created thousands of other crypto projects.
Most coins eventually dropped 99% or more when the bubble burst, with only altcoins with a shred of promise hanging from some of their earnings.
The best projects mentioned above have held their value well against the coins further down the list, which were decimated during the bear market. Many of them, many never trade closer to historic highs.
Crypto capital manager Su Zhu, an industry veteran, says newcomers won’t fall in love with the same act again.
People who expect dominance (a flawed metric as it is) to get closer to 2017 lows forget that pretty much everything that isn’t BTC has now shown 3 years of failed promises and anti-lindyness
this fact will not be lost to newcomers when they contemplate what to buy
– Su Zhu (@zhusu) October 27, 2020
DeFi could prove that dumb money will fall for the same tricks in the next cycle
Too many crypto projects are now defunct, have scammed the exit or are too useless for investors to even consider if another bull market starts. The newest coins, as DeFi has shown, will always be the most attractive in a speculative asset class.
Related reading | Cryptocurrency analyst: altcoins to “tank” as Bitcoin turns to all-time highs
The negative sentiment surrounding XRP or Litecoin, for example, kept them underperforming Bitcoin and Ethereum, as Chainlink exploded into the top ten.
Chainklink shows shiny and new is still best in crypto | Source: LINKUSD on TradingView.com
Chainlink, however, is an example of the fact that not all new projects are empty promises, and the DeFi trend itself could prove that Zhu’s theory is incorrect.
Even if a full bull run isn’t here, ignorant investors will likely buy back the droppings left behind once again, as they just were while DeFi was at its peak. Coins with the name of freshly baked food rose, then in a flash they burned the late investors.
The scenario looks all too familiar and could suggest that when there is a bull market in a speculative asset class, there is no way to stop fool and money from starting.
Featured image from Deposit Photos, Charts from TradingView.com
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