Altcoin
This Bitcoin cycle could be the ‘last gasp’ for Altcoins, one analyst predicts
The days of making big money with obscure memecoins during a cryptocurrency bull run may soon be over, according to Glassnode lead analyst James Check.
The expert of on-chain markets expected Tuesday that a large group of young Bitcoin holders may now hold significant sums of money who are less willing to gamble on riskier assets.
“People are increasingly reluctant to turn into assholes because they know they’ll get by just sitting in place,” Check wrote at Twitter. “Don’t bullshit. They bet on memes here and there, but only to the same extent do they bet on football.”
Check argued that the main source of demand for “shitcoins” thus far has been “millennial cryptocurrency natives,” who are now transitioning from the “get rich” phase to the “stay rich” phase of their financial lives.
This theory is supported by numerous surveys showing that both ownership and support of cryptocurrencies are overrepresented among 18-40 year olds. For example, a Grayscale survey of US voters released Tuesday found that 62% of Gen Z believe cryptocurrencies are the “future of finance.”
That said, the analyst believes the investment community has recovered after the latest bull market and is able to separate winners, like Bitcoin, from altcoins that generate “no serious demand.”
Altcoin holders may, therefore, struggle to find willing buyers for their largely speculative tokens.
“We may not be too far from the last gasp of alternatives,” he wrote. “Millennials and Gen Z are asking the next generation to buy their bullshit coins, and it’s no different than boomers asking them to buy overvalued homes.”
The analyst’s final thesis, however, has yet to be realized. As Bitcoin rallied 50% earlier this year after receiving its own US spot ETFsmemecoins without an explicit use case, including DOGE, SHIB, PEPE, and WIF, have risen even more.
It’s an oft-repeated phenomenon that Bitwise CIO Matt Hougan has previously described as the “wealth effect”. When long-term Bitcoin holders get rich as demand for BTC increases, they tend to cash in on the profits and feel comfortable using them to bet along the risk curve.
Since altcoins have much lower volumes and market capitalizations than BTC, it is not necessary to move so much money into the assets to drastically increase their price, Hougan noted.
Check himself has often called attention to the sell-off embraced by long-term Bitcoin holders earlier this year, pointing to profit-taking behavior reminiscent of many previous bull markets.
Since early May, long-term Bitcoin holders appeared to be returning to hodling, needing “higher prices to motivate selling,” according to Check.