For some altcoin hodlers, the long-term investment turns out to be a stress test. Quite a few who got involved at the height of the crypto boom ultimately backed the wrong horse.
Depending on the stock exchange aggregator used, there are now around 6,000 to 8,000 digital currencies in the crypto sector. It goes without saying that not all of them write a success story like Bitcoin. After the gold rush mood in 2017, quite a few altcoins have disappeared into insignificance. While the Hodln has paid off for Bitcoins, the performance of some formerly more or less ambitious Altcoins demands a thick nerve from long-term investors.
Altcoins in free fall
Matt Masto, an analyst at CMT Digital, has listed and evaluated the largest altcoin rivets based on the data collected by the analysis portal Messari. The sobering balance sheet: Of the 410 listed altcoins, 83 percent of all coins that celebrated all-time highs in 2018 are only worth a tenth of that today.
In the case of altcoins, which reached record highs in 2017 or 2019, the balance is slightly better. With 82 or 72 percent discount, however, we cannot speak of a successful career for them either.
According to Casto, investors who got on board during the peak of the crypto boom in 2017 simply squandered their capital:
Holding assets that peaked 3 years ago turns out to be a massive lost opportunity cost of deploying capital. There’s a reason 83 percent of assets that hit a high in January 2018 are trading 90 percent below their ATHs.
Casto remains silent about the reason. But the fact is: The flop selection includes such dazzling coins as Pluton (PLU), Presearch (PRE), Neblio (NEBL) or Buzzcoin (BUZZ). Never heard? Just.
A large number of Altcoins were, so to speak, free riders. After the ride on the wave of success, they went down without a sound in the first storm. The respective reasons for the descent may differ in detail from coin to coin. But what they all have in common is that the projects behind them couldn’t keep their use case promises.
Capital shift: DeFi as a profiteer
Nevertheless, a lot of capital has accumulated over the years in these seemingly dead crypto projects, also known as ghost chains. Money that could be reallocated within the crypto ecosystem and increasingly flow into DeFi applications.
Last year, the Twitter user and EthHub co-founder “eric.eth” put the value of the ghost chains at around 50 billion US dollars and predicted a shift towards decentralized finances .
Billing with the ghost chains will come. There is well over $ 50 billion in market value for chains that no one is using. They will all be pushed out of DeFi apps with actual usage by the end of this market cycle.
In fact, the DeFi market has seen a huge inflow of capital since the middle of last year. According to Defipulse , the Total Value Locked (TVL) of all tokens integrated in DeFi applications currently amounts to more than 22 billion US dollars. While many Altcoins are treading on the spot, DeFi-Coins are taking over ever increasing market shares. If you put the 50 billion US dollars rumored by “eric.eth” in relation to the current TVL, there also seems to be some room for improvement.
Why the DeFi market is considered undervalued and what growth potential decentralized finances still have can be read at this point .