Is the Altcoin Market Finally Going Through a Large Correction?

I have been calling for a while now that I believed the entire crypto market, especially the altcoin market would most likely go through a pretty large correction, just because of the fact that there are so many currencies out there that have little to no user base. With the rise in the price of bitcoin, many of the exchange rates we saw just stayed the same which brought the coins up to all time high market capitalizations. This is really not how the market is supposed to work when it is high functioning. In my opinion it was only a matter of time before the market as a whole realized this and that is what we saw yesterday.

I should say that most likely bitcoin will also see a decently sized correction in the weeks coming up to the August usaf and potential hard fork if both side’s threats end up happening. Many people don’t want to risk their money essentially splitting into two chains and might be pulling out for the time being. There is also a possibility that some people are actually going more into bitcoin to make sure they get more coins on each chain if a split happens. Both of these possibilities could account for the exchange rates of altcoins into bitcoin falling.

The problem with the altcoin space is that, while many coins do have novel features and are great test nets for larger coins, they are almost 95% speculation. Bitcoin is speculation as well, but there are some use cases that people are using it for, like store of value for example. The altcoins, even if they do bring good features, are still being worth more money than some companies with a ton of revenue and employees. There are coins with a 100 million dollar market cap that literally have one or two developers who aren’t even particularly skilled.

This is the same thing we saw during the time of the dotcom boom when, now infamous sites, like pets.com, were being valued at amounts that didn’t warrant the value. I think we are seeing the same thing today with the app market in silicon valley and in the coin and IPO markets in crypto. I just don’t see this being able to sustain itself for a long term period of time without corrections happening. When there are people who are upset because they only got a 3x return instead of a 10x one, you know something is wrong.

The good thing about corrections though, is that it will show which coins actually have long term survivability and the ability to weather the storm. Those which had developers who were just looking to get rich quick, or a user base that was simply just speculating, will see large sell offs and potentially die. But in the rubble is where real tough and useful currencies will thrive. It is time for them to show what they are made of and that they can stand the test of time. Even if this was just a fake out and we see full returns in the next few weeks. I think a correction still needs to take place, for the entire space, including bitcoin.

Thanks to @Elyaque for the badges