Over the last few weeks, I imagine many crypto speculators have woken up each morning, stared at their Blockfolio and sighed 'when Alt season?' As they watch Bitcoin almost quadruple in value, surely it is only a matter of time before alts rise significantly too? For history has shown us, sure as night follows day, that a Bitcoin rally is invariably followed by an altcoin rally. This time will be no different. Will it?

Supporting act

If cryptocurrency was a story than the main protagonist would undoubtedly be Bitcoin. 'Altcoins' have been a supporting act.

First, we had an era of the 'true altcoin'. These were simple 'copy-pastes' of the Bitcoin codebase, with a few parameters tweaks.

Then we had the era of the 'cryptocurrencies'. New protocols, with new use cases. Be it anonymity and the Cryptonote codebase that Monero is based on. Or the 'World Computer', 'platform' blockchains lead by Ethereum. These cryptocurrencies promised to unlock the true potential of blockchain technology. We then had the ICO craze. We were going to tokenise everything. Followed by the 'forks', pretenders to the BTC crown, that were going to adhere to the 'true' purpose of Bitcoin.

The proliferation of coins meant that even though Bitcoin was the first cryptocurrency, it's dominance was called into question. Even a 'flippening' (where another crypto became more valuable in marketcap than bitcoin) looked a distinct possibility.

Many speculators were looking to get in on the ground floor of 'next' cryptocurrency that was going to do Bitcoin like returns. Thus when Bitcoin pumps, altcoin pump harder.

Once bitten

I'm not sure that's the sentiment this time around.

The last 12 months have been brutal for Altcoins. 2017 saw a lot of money pumped into Projects that either failed to deliver a meaningful product or if they did produce something failed to gain any traction or user adoption. Most tokens associated with these projects lost most if not all their value.

2017 was very much a speculation bubble; picking 'winning coins' was a simple as throwing darts at the wall. Everything was going up and crypto was going to solve the world's problems. Any bright (or not so bright) idea was getting money thrown at it. I had conversations with many people that bulked at Bitcoin's 'price' yet had no concept of the circulation supply, maximum supply, marketcap or liquidity of the 'bargin' coin they were about to purchase.

The 2018 bear market will have been a reality check for many. One that will surely make many people more circumspect during the next bull market. Discerning investors are going to want to see receipts.

Particularly when Bitcoin, with this rally, has solidified its 'store of value' use case and its narrative of being digital gold being a simple one to grasp.

Footnote

'Past performance is no guarantee of future performance'

It is sobering to think that despite all the innovation and interest around the crypto market, altcoins might just become a footnote the in Bitcoin story.

We may look back and see the 2017 bull market being either the 'ICO or Altcoin speculation' bubble, in much the same way we look at the 2013 bull market as being the 'Willybot' bubble.

The next bull market could easily be the 'Institutional FOMO' bubble. It could be a bubble that demands a single focus (Bitcoin) in order to drive serious liquidity. Many people may end up looking back on their personal pizza day moments. Times, where they let absurd amounts of Bitcoin slip through their fingers purchasing a defunct Altcoin.

Conclusion

Only history knows the true fate of cryptocurrencies and tokens.

I believe most cryptos will die. However a few will emerge as behemoths in their own right, shaking up one industry or another.

Choosing the right ones however, could be as much luck as judgment. One (genuine) partnership or deal could completely shift an illiquid landscape.

Thus if you are going to place a 'bet' (educated or otherwise) on an Altcoin, recognise that it is a bet. The prudent move, in my view, is to ensure that you're at least hedged with some Bitcoin. Not financial advice, of course, just good old common sense in the circumstances.

_{Image by Stefan Keller from Pixabay}