One thing I've definitely regretted was closing my shitcoin shorts. They've all outperformed longing BTC and they seemed less stressful... So far I've been unable to clearly understand whether this is good or bad for Bitcoin.
They are seriously crumbling and there are too many longs open. Personally I am of the opinion that overall alts are a net positive for Bitcoin in many ways. They attract people that would want to do stupid things on Bitcoin, they attract people that think they missed the boat, they educate people on what is possible and what isn't on a blockchain, they separate greedy people from their money, they make accumulating Bitcoin faster, they provide a speculative use case and liquidity and so on. The last part is what I am interested in.
As they crumble the liquidity use case of Bitcoin for alts is going away. Or is it not? Several are making new USD lows as BTC goes up. At least some have broken their USD end of July lows as Bitcoin is just down 5% from its recent local top.
Alts are highly inflationary and have really broken liquidity. In the past there were way less altcoins, way less exchanges and Bitcoin wasn't as heavily accumulated by strong hands. So it was a lot easier for these coins to have smaller spreads and better liquidity. Now there are thousands of coins, on more than a hundred exchanges, with multiple Crypto, Fiat and stablecoin pairs. This is making these markets less efficient, they have less buy support and they are milked by arbitrageurs constantly.
However the main issue is that there is constant influx of new coins most of which also have such high inflation (high mining or staking rewards, founders dumping premined tokens/coins, lock up periods expiring and so on). IEOs for example are sucking USD and these teams then spend it. At the same time these IEOs create new tokens that are pretty much pumped straight away and dumped on the market.
So the negatives of altcoins on Bitcoin's liquidity and price are:
a. Altcoin miners dump coins for fiat or USD to cover costs
b. Altcoin teams dump to pay advertisers, developers, etc or simply to make themselves richer
c. VCs, insiders, scammers, exchanges and all them have been sucking a lot of investors/traders money
d. The altcoin bubble harmed a lot of investors creating a bad image for the space, while made enemies of Bitcoin stronger
d. A lot of fiat funds are currently 'stuck' in leveraged long altcoin positions
e. Arbitrageurs are making a killing from simple traders and holders
f. Through all the fiat pairs Bitcoin is losing some of its liquidity that could had been directed on it
g. With lots of altcoins fading away a lot of the BTC use case is going away
and the positives are:
A. Most altcoins are traded against BTC and priced in BTC
B. Many altcoins derivatives or margin long positions use BTC as collateral
C. Many of the people above use their profits to buy Bitcoin as well (from miners to scammers etc)
D. Many altcoin teams have brought more people into the space
E. Most of them are building things that are or will be useful for Bitcoin & they are like an off chain scaling solution for Bitcoin
F. With altcoins slowly fading a lot of the fiat capital is redirected to BTC
They are seriously crumbling and there are too many longs open. Personally I am of the opinion that overall alts are a net positive for Bitcoin in many ways. They attract people that would want to do stupid things on Bitcoin, they attract people that think they missed the boat, they educate people on what is possible and what isn't on a blockchain, they separate greedy people from their money, they make accumulating Bitcoin faster, they provide a speculative use case and liquidity and so on. The last part is what I am interested in.
As they crumble the liquidity use case of Bitcoin for alts is going away. Or is it not? Several are making new USD lows as BTC goes up. At least some have broken their USD end of July lows as Bitcoin is just down 5% from its recent local top.
Alts are highly inflationary and have really broken liquidity. In the past there were way less altcoins, way less exchanges and Bitcoin wasn't as heavily accumulated by strong hands. So it was a lot easier for these coins to have smaller spreads and better liquidity. Now there are thousands of coins, on more than a hundred exchanges, with multiple Crypto, Fiat and stablecoin pairs. This is making these markets less efficient, they have less buy support and they are milked by arbitrageurs constantly.
However the main issue is that there is constant influx of new coins most of which also have such high inflation (high mining or staking rewards, founders dumping premined tokens/coins, lock up periods expiring and so on). IEOs for example are sucking USD and these teams then spend it. At the same time these IEOs create new tokens that are pretty much pumped straight away and dumped on the market.
So the negatives of altcoins on Bitcoin's liquidity and price are:
a. Altcoin miners dump coins for fiat or USD to cover costs
b. Altcoin teams dump to pay advertisers, developers, etc or simply to make themselves richer
c. VCs, insiders, scammers, exchanges and all them have been sucking a lot of investors/traders money
d. The altcoin bubble harmed a lot of investors creating a bad image for the space, while made enemies of Bitcoin stronger
d. A lot of fiat funds are currently 'stuck' in leveraged long altcoin positions
e. Arbitrageurs are making a killing from simple traders and holders
f. Through all the fiat pairs Bitcoin is losing some of its liquidity that could had been directed on it
g. With lots of altcoins fading away a lot of the BTC use case is going away
and the positives are:
A. Most altcoins are traded against BTC and priced in BTC
B. Many altcoins derivatives or margin long positions use BTC as collateral
C. Many of the people above use their profits to buy Bitcoin as well (from miners to scammers etc)
D. Many altcoin teams have brought more people into the space
E. Most of them are building things that are or will be useful for Bitcoin & they are like an off chain scaling solution for Bitcoin
F. With altcoins slowly fading a lot of the fiat capital is redirected to BTC