Skip to content

The emission of cryptographic assets will push Bitcoin down

For almost a decade, with the exception of early 2018, Bitcoin (BTC) has ruled the cryptography market with an iron fist, dominating its altcoin brothers. However, as blockchain technologies spread, with tokens increasingly common and more present than ever, analysts have claimed that the largely unquestioned hegemony of Bitcoin will begin to be criticized.

The flood of Altcoin can put downward pressure on Bitcoin

The research arm of the Federal Reserve Bank of St. Louis has been interested for a long time in cryptocurrencies. The arm of the central bank of the United States published for the first time a document on virtual currencies in 2014, and since then, the economic entity has continued producing pieces of analysis in the market of cryptography.

In a recent piece titled “Where is the price of Bitcoin?”, Two economists from the St. Louis FED explain that the value proposition for BTC is limited between the indefinite appreciation, due to the ceilings of supply and demand growing, and fall to zero.

Using a hypothetical analogy with the invoices of Hamilton ($ 10) and Lincoln ($ 5), it was explained that an increase in the offer of the latter would cause the purchasing power of both bills to fall. The entity wrote:

“The increase in the supply of Lincoln tickets has led to a decrease in the purchasing power of both Lincoln tickets and Hamilton Invoices, even though Hamilton’s bill supply has remained fixed”

About this scenario

While the researchers acknowledged that this scenario could not be applied directly to digital currencies, they explained that altcoins can pose a threat to Bitcoin’s fiat value. By issuing cryptographic assets from left to right, with thousands of projects trying to capitalize on the temporary demand, the FED branch said that BTC could “get depressed in relation to what would have been otherwise.”

Interestingly, the response of the research group was not unfounded, as it drew attention to Bitcoin’s market dominance, specifically pointing to the collapse of the measure in recent years. And as such, the St. Louis Fed said that while BTC is different from capitulating to $ 0, a large number of altcoins can exert a “significant downward pressure” on the purchasing power of all cryptocurrencies, including Bitcoin. .

Crypto report begs to differ

And while this somewhat bearish outlook is only theoretical, a report by A.T. Kearney, a multinational management consulting firm, expects the Bitcoin domain to grow in 2019. According to previous reports from Crypto-Tidal, Kearney expects BTC market capitalization to reach “almost” two-thirds of the aggregate value of cryptocurrencies. When citing reasons for this goal of ~ 66%, which is not out of the question, the US firm allegedly claimed that the altcoins have “lost their shine” due to the growing risk aversion tactics recruited by retail investors.

The basics of Bitcoin have also historically outperformed their counterparts on the lower rungs of Crypto’s long staircase. In 2018, the network saw adoption, fundamental growth and development, with a Bitcoiner explaining that “by any metric [other than price], the system is improving and growing.” And with institutions focused on BTC, perhaps the prospects of the assets are not too bleak, despite the heartrending report of the St. Louis FED.

Published inCryptocurrencies

Be First to Comment

Leave a Reply

%d bloggers like this: