In the past few weeks, the crypto market has experienced some lows. This could be due to a second wave of the coronavirus slowly starting up in some countries. Whatever the reason, the question that has undoubtedly been on everyone’s mind is simple to guess. Can the crypto market bounce back during the post quarantine period, and will altcoin capitalization still see growth by the end of this year?
This article uses the power of deduction, and careful analysis and study of the crypto market, to make an educated prediction on the future of Altcoin capitalization in 2020. But first, what exactly is Altcoin capitalization.
What is Altcoin capitalization?
There are more than 5,000 cryptocurrencies in the crypto market, and while the oldest ones are known as BTC, others are fondly referred to as ‘Altcoin.’
Altcoins are the thousands of cryptocurrencies existing alongside the popular bitcoin, exist alongside each other, and compete with each other. Since the bitcoin halving this year, there have been predictions of growth in Altcoin capitalization. However, that growth is slow in coming.
We might not know the best cryptocurrency to invest in from all the Altcoins because of the sporadic growth. But several Altcoins have stood out from the rest, especially in 2020.
Will Altcoin capitalization increase during the post quarantine period?
The good news
BTC has slowly begun to stabilize as the world gets slowly back to normal. We have also seen some Altcoins and other crypto assets make recoveries and gains over the past few months.
What more? There has also been an increase in the listed crypto coins (now 5,871). Crypto exchange has risen to 382, and the cumulative crypto trading volume is already over 72.6 billion dollars.
What this means for the world of crypto and anyone looking to invest is that investors and global traders are rushing into Altcoins.
Even with how unstable it has been this year, many investors will instead invest in Altcoins, hedging against inflation-prone assets.
The resurgence of COVID-19 cases has not deterred this rush by investors into certain Altcoins. In fact, the market has seen a faster bounce back, as more and more investors rush towards crypto trading.
The bad news
Not all Altcoin capitalization might see growth through the post quarantine period, however. While BTC has recovered from the earlier crash to the risky stock market since the coronavirus outbreak, other smaller Altcoins have not.
Altcoins that rely primarily on selling their token to fund development are in the red.
In 2017, during the bull market, all altcoins saw a skyrocket in their prices. Those who had projects received more than enough capital to fund it and deploy development and marketing efforts in the right direction. It was not surprising then that most Altcoins saw their all-time highs in January 2018.
But, with the COVID-19 outbreak, many of these Altcoins are trading 70% – 90% below their January 2018 trades.
Investors have received a devastating blow from many of these Altcoins. We can see many small projects already struggling to survive the crisis that came with the coronavirus pandemic. Tokens have dropped in value. Investors are left with less capital even to deploy them.
It will be no surprise, then, if investors move their money to safer crypto options (like BTC) and shy away from investing in smaller or unknown Altcoins in the future.
Other factors to consider
Raising capital for Altcoins is harder
With the coronavirus pandemic, it became harder for most small Altcoins to raise capital to fund their projects, pay developers, etc. And as most cryptocurrencies get their capitals from venture capital firms, meeting these firms in person is somewhat of an impossibility at the moment.
Not just that, but investors are now more interested in where all their investments are going, so it might not be as easy to get capitals for some Altcoins.
However, once the post quarantine period commences, we expect that companies will go back to business as usual, and we will see more VCs giving out capitals to various Altcoins.
Lower prices on cryptocurrencies
The inception of the coronavirus saw prices in BTC and Altcoins grossly reduced. While BTC is getting back to its feet as things get slowly back to normal, some major Altcoins got the worst end of the stick.
The drop in asset prices affects these Altcoins the most, and smaller project Altcoins are receiving the worst of it all.
For example, as most of these Altcoins funded their projects by selling their token and then infusing the money into their system to pay their developers and other people, this might not be possible anymore.
Small Altcoins that have market capitalization under 50 million dollars, if another wave of the coronavirus approaches, they could be well on their way to bankruptcy. The struggle to pay their web developers and invest in their marketing will be too great to bear. These are not cryptocurrencies to invest in.
And although the Central Bank is set to carry out a cash injection and create a zero interest rate environment, we foresee BTC being the cryptocurrency to benefit most from this. Sadly, other smaller Altcoins don’t have the same opportunity. These Altcoins might not be the best crypto to invest in for a while.
Most investors will tell you that if you are looking for the best crypto to invest in, obscure Altcoins aren’t the way to go. Most of them who have already invested in these Altcoins are just trying to keep their heads above water.
However, after quarantine, we project that those investors who have survived the crash in the value of their Altcoins will be in a great position to invest again.
Until then, avoid investing in obscure Altcoins, do your research on the Altcoins making a splash, and try to survive if you have already invested in a failing Altcoin.
John Edwards is a writing specialist who works at the Writing Judge. He is looking for ways of self-development in the field of writing and blogging. Therefore, it is so important for him to do the writing.