JVTech News What will become of the 20,268 cryptocurrencies if Bitcoin falls?
While several experts believe they are entering “crypto winter” following the onset of an interminable decline in bitcoin over the past year, one question arises: What will happen to the other 20,000 cryptocurrencies if the top-ranked virtual currency falls? ?
- The ever-expanding cryptocurrency industry
- Bitcoin and Altcoin (Shitcoin, Token, Stablecoin…): not all cryptocurrencies are the same
- The corners
- stable coins
- DeFi, same coins or Shitcoin, for the most virulent: these cryptocurrencies that surely won’t survive the winter
- Decentralized finance (DeFi) has brought many new cryptocurrencies.
- Same coins or Shitcoin
- Bitcoin leads the market
The ever-expanding cryptocurrency industry
With these volatile price movements, Bitcoin has created a real empire in just a few years. Through these several bullish cycles, the cryptocurrency has given many people ideas. Motivated by the volumes of money invested, some individuals and organizations have joined the venture. Therefore, as it grew, Bitcoin was joined by thousands of cryptocurrencies in the charts.
Now it’s easier and easier to create your own cryptocurrency. While some tend to solve problems or even meet the needs of this young ecosystem, such as Ethereum, another majority of cryptocurrencies have almost no use, except for speculative potential.
Therefore, after 3 bull cycles since the emergence of Bitcoin, the cryptocurrency sector counts almost 20,268 cryptocurrencies of all types in July 2022. Compared to the number of currencies in the physical world, which is 180, the figure seems impressive.
But then, what can they be used for?
Bitcoin and Altcoin (Shitcoin, Token, Stablecoin…): not all cryptocurrencies are the same
First, you need to understand that the cryptocurrency ecosystem is divided into two parts: Bitcoin and altcoins.
Altcoins are all those other cryptocurrencies that share the market with Bitcoin. These different virtual currencies take different forms.
These are independent cryptocurrencies that use their own network to operate. They are more or less similar to how Bitcoin works.
Stablecoins are stable cryptocurrencies backed by real value. Generally guaranteed by a unit of currency (1 dollar, euro, yen, etc.), these have made it possible, among other things, to solve the volatility problems that reign in the world of cryptocurrencies. Therefore, most other cryptocurrencies must be purchased through stablecoins.
Called tokens, tokens use networks that are not their own. Unlike a cryptocurrency, the blockchain doesn’t need the token to work. In this sense it is therefore easy to implement since it is sufficient to issue the token without worrying about the architecture of the network that will be used for the token to work.
For this reason, tokens make up a significant majority among the 20,268 existing cryptocurrencies.
DeFi, same coins or Shitcoin, for the most virulent: these cryptocurrencies that surely won’t survive the winter
The development of the second ranked cryptocurrency, Ethereum, has spawned a multitude of tokens.
Decentralized finance (DeFi) has brought many new cryptocurrencies.
The application of the famous smart contracts, which allow consent to be obtained when multiple conditions are met, has allowed the Internet to access a new form of financial services. In short, these services are usually backed by cryptoassets to keep the protocols running. They can be grouped into two subparts:
- Utility tokens, used to access the services of a cryptographic protocol
- Governance tokens, which allow decisions to be made within a decentralized organization
Same coins or Shitcoin
Beyond the previously mentioned tokens, the biggest mystery of cryptocurrencies remains shitcoins. These cryptocurrencies are generally of no use and are sailing on a trend, meme, or even current events. However, despite the lack of consistency, many of its shitcoins have risen to the top of the cryptocurrency chart. We can quote:
- the same DOGE coin in tenth place (the favorite cryptocurrency of billionaire Elon Musk)
- the Shiba INU, ranked 13th
These cryptocurrencies are mostly the stuff of investor fantasies. Several projects have brought in colossal sums, with no justification other than the law of supply and demand (and a good deal of speculation).
Except that if most shitcoins can exist in periods of growth, during declines, it is much more complicated…
Bitcoin leads the market
Among the multitude of existing tokens, many will not recover if Bitcoin falls for the umpteenth time. In fact, in the sector, cryptocurrency reigns supreme over the entire market. Generally, when the price of Bitcoin falls, other cryptocurrencies follow. This concept has a name: Bitcoin dominance.
While the influence of bitcoin seems to be declining over the years with the exponential creation of various cryptocurrencies, the dominance of bitcoin still drives the direction of the market. To be precise, Bitcoin still accounts for 38% of the cryptocurrency market.
Based on this observation, it is certain that several cryptocurrencies will disappear into limbo if Bitcoin goes down again. The first victims will certainly be cryptocurrencies with no fundamental value and no added value. Therefore, pikachucoins and other Mooncoins will visit 0€ if the crypto winter is confirmed. Out of over 20,000 cryptocurrencies, it’s a safe bet that over 90% of them won’t survive the winter. Also, since Bitcoin dropped from €54,000 to €20,000, many of these tokens have been sidelined.