Up to 90% of 'cryptos' will not survive the Bitcoin bear market, which ones will remain?
The future of cryptocurrencies looks uncertain after the recent wave of selling in Bitcoin and other tokens. Although some experts believe that the market has begun to form a floor, others warn that the decline may be greater, so cryptoasset owners and investors may be concerned about the stability of digital tokens. In fact, observers warn that the current situation will kill a huge number of 'altcoins' and projects, which will not survive the 'cryptocrash'.
However, "while in the short term this plunge in value may have a negative impact, the fall will help the surviving coins to strengthen further," commented Louis Schoeman, CEO of Forex Suggest. But it's not all negative, as current market conditions "also serves as a massive opportunity for many no-coiners to enter the crypto market for the first time ever at prices not seen since 2017," he added.
"With massive inflation data and the semi-collapse of the Celsius network driving the downward spiral, I think only the best fundamentally strong crypto projects will survive this bear market," Schoeman stated. "This is a cleansing process of note as we believe between 80% - 90% of the crypto projects will not survive this period especially if Bitcoin falls below $20 000," the expert warned.
"In these complicated times, we cannot lose sight of the fact that some of these currencies will go ahead, but the most important thing is that blockchain technology will mean a substantial improvement in the efficiency of companies, and therefore will have a very positive impact on the economy in the near future," commented David Levy, of DiverInvest. "The winners are yet to be seen or may not even exist today, just like the Internet bubble in the year 2000," he added.
Lark Davis, founder of The Wealth Mastery, acknowledges that it is impossible to know exactly which coins will survive the crypto winter. But he explained that there are "a few factors that will help us figure out which ones have a good chance of coming out stronger than before."
For example, the cash reserves that they have. "This metric is very important to try and figure out, and yet very few projects will straight out tell you their cash reserves," the expert commented, and in most cases, you will need to dig for this info in Discord or Telegram. If the teams can’t give you a halfway decent answer then it probably means they are not doing well financially," stated Davis.
Next, it's important that the project has a solid business model, with an ongoing revenue stream. "Coins that have solid burn models, strong in-game economies, or pay out dividends have the best chances of coming out strong on the other side," the founder of The Wealth Mastery explained.
Token unlocking schedules are also an element to consider. "If the market is about to be flooded with tokens then expect a serious price crash," the expert indicated, especially with the existing panic and low market liquidity.
Which leads precisely to the question of how liquid 'cryptos' are, especially those of low capitalization. This is important, because "as the crypto market contracts, we can see liquidity for these coins dry up to almost nothing. That means you can’t sell your coins."
Also, the analyst asked himself if there is a real community behind the project. "When they post on Twitter does anyone care or engage? Is there a Telegram group, and if so what are people saying, and is anyone even in there?"
Another aspect, difficult for the average investor to understand, but also important, is how the technological advances of the token and the blockchain it underpins are doing. "Most projects will have a GitHub that can be tracked," the analyst pointed out
Finally, Davis advised looking at a token's performance history in the bull market. If a token was already slaughtered back when things were going well, why would we possibly assume that these coins will do any better in a brutal bear market? "If things are looking bad now for a coin, chances are they will only get worse as the financial pressure, social pressure, boredom, and general despair of the bear market increases," the expert commented.
To conclude, the expert recommended to not be in a hurry, as the bear market will last. He also urged everyone to remember that "even if a coin looks awesome and ticks all the boxes it can still fail terribly." "So don’t put all of your eggs in one altcoin basket,'" he concluded.