In order for a crypto asset to be attractive to traders it needs to have liquidity. Without any daily volume there is nothing really to trade and recent findings indicate that 95% of altcoins fall into this category.
Dying Altcoins in The Thousands
Even with today’s minor dip, bitcoin dominance is still holding above 70% according to Tradingview.com. This means that, yet again, the altcoins are getting punished.
2019 has been a terrible year for altcoins, with the majority of them ending the year lower than they started it. Next year could be even worse for the majority of them as liquidity and volumes fall dramatically.
Earlier in the year, crypto analyst, Willy Woo, looked into the liquidity of altcoins and discovered that as many as 99% of them were illiquid.
Today, The Block’s research director, Larry Cermak, has continued with this; noting that most altcoins will go to zero not by price, but in terms of liquidity.
95% of cryptocurrencies currently have no liquidity and another 2% very little liquidity. Most of shitcoins won’t die by going to 0 but by having no liquidity
Following similar analysis by @woonomic, I looked at the liquidity of cryptocurrencies (using @coinpaprika‘s data). 95% of cryptocurrencies currently have no liquidity and another 2% very little liquidity. Most of shitcoins won’t die by going to 0 but by having no liquidity pic.twitter.com/Efr2LdD93l
— Larry Cermak (@lawmaster) December 23, 2019
At the time of writing, Coinmarketcap lists 4,960 crypto coins and tokens. Only the top 20 or so of those altcoins have any measurable liquidity.
Bitcoin has more than nearly all of the others combined at the moment, and as much as five times more liquidity than Ethereum. Bitcoin also has more than 10 times the liquidity of all the other cryptocurrencies including XRP, BCH, Litecoin, and EOS. Stablecoins have been omitted from the research.
Bitcoiner, Udi Wertheimer, added that price cannot go to zero if there are still buyers and sellers agreeing on a price for a token. The deaths will come in terms of liquidity and there are thousands of altcoins out there that are unlikely to survive the next year.
Even in the top one hundred, volumes are very low for those at the bottom of the list which include Bytecoin, Electroneum, Crypterium, SNX, SOLVE, and Centrality. Going beyond the top 100 by market cap reveals literally thousands of altcoins with no liquidity.
The end of 2019 has been a repeat of the 2018 crypto winter for all but a handful of altcoins which have ended the year in the green.
Those that are most likely to survive another year need to be actively traded to nurture price action. The rest are likely to be added to the pile of crypto pollution as they slowly fade from memory.
How many altcoins do you think will die in 2020? Add your thoughts below!
Images via Shutterstock, Twitter @lawmaster