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Saturday, October 16, 2021

Altcoins Recovery Might Be Hampered Despite The Return Of Bulls

Although it has been more than 40 days since the market collapse, several investors are still wondering how far can altcoins recover. This concern comes despite the bear market returning longer than expected. On the 19th of May, the entire cryptocurrency market took a nosedive of 19% which has since now failed to get back to its earlier mark of $1.8 trillion.

But before any strategic comment can be made about the situation, traders and analysts have to understand what specific sectors managed to stop the brunt of this nosedive. Further, they need to distinguish which cryptocurrencies actually managed to stay afloat in the last month.

Federal Regulations A Big Blow For Altcoins 

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While it is clear that the total crypto market cap went down by a sum of 5% in the last month, almost 44 of the top 100 altcoins went down by 19% in the period. This pretty much makes the decisions of investors cutting losses pretty clear.

Interestingly, most of the worst performers have come from the smart contract platforms. In fact, almost five out of the top six seem to fall in this category. One of the major aspects would be a strategic drop in the network gas fees of Ethereum. No wonder this has led to far lesser demand for more drastic and alternative solutions. 

Yet another pattern that has come out is the synthetic assets category amongst the altcoins- represented by UMA, Synthetic Network Token, and the PERP token of Perpetual Protocol. Most investors have been sensing issues that could crop up something that has been supported by the recently published policy toolkit by the World Economic Forum.

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The toolkit contains the major dictum of the decentralized finance regulation- which has further lent status to Dan Berkovitz- the Commissioner of the US Commodity Figures Trading Commission. The Commissioner has come out and stated that DeFi protocols- a major part of altcoins- could verily be illegal. 

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