Altcoins
Top Analyst Explains Why Most Altcoins Fail and Lose 99% of Their Value
Analyst Lark Davis recently explained that evaluating altcoins starts with understanding their simplicity. In a new analysis video, he said that while some altcoins have easy-to-digest summaries, most do not. The newer a token is, the more difficult it is to package and evaluate, leading to higher risks. These altcoins can soar in bull markets, but can also crash dramatically when market sentiment changes, sometimes losing up to 99% of their value.
He said it is important to categorize altcoins to identify the most promising ones. The term “altcoin” is broad, so it makes sense to divide it into subcategories.
Ethereum debate
Starting with Ethereum (ETH), there is debate over whether it is still considered an altcoin. Bitcoin maximalists argue that it is, others believe it is too large to be classified as an altcoin, suggesting it is its own asset class, especially with the advent of spot Ethereum ETFs.
Emerging projects
Beyond Ethereum, major layer-one alternative blockchains like Solana, Avalanche, and Cardano dominate the top ranks, often appearing among the top 10 to 15 cryptocurrencies by market capitalization. Newcomers like Tonchain are also making notable progress. He said these projects are typically volatile but offer long-term growth potential.
Ethereum Layer-2 Expansion
Additionally, the layer 2 Ethereum ecosystem is growing with networks like Arbitrum and Base, and even layer 3 solutions built on top of these layer 2 platforms, such as Arbitrum’s Orbit and Degen on Base chains. This complexity adds to the diversity of the altcoin market.
Utility projects are another crucial category, including oracles, AI coins, real-world asset coins, decentralized exchange tokens, and gaming tokens. These altcoins vary widely in terms of market capitalization and of utility, often experiencing extreme price fluctuations over short periods of time.
Meme Coins
At the more volatile and riskier end of the spectrum is a continued influx of new coins. Although many of them are highly speculative and short-lived, a few manage to establish themselves as long-term assets. Dogecoin, the original meme coin launched in 2013, is a great example of this. It has become a staple in the cryptocurrency landscape, proving that even meme coins can achieve lasting success.