Buyers beware as “altcoin” frenzy bruises bitcoin


Bitcoin’s more modest antagonists are disintegrating its share of the $2 trillion digital currency market. Of the dozens fastening at its spurs, most have little use exceeding commercial trading – but few of the investors sustaining their rise seem worried.

Amongst the major “altcoins” – as all cryptocurrencies aside from bitcoin are known – some such as ethereum strive to be the spine of a future financial system. Others, like Dogecoin, have no such objectives and are hardly used in payments or business.

For the army of retail punters streaming money into them, their backstory – and the integrated buoyancy that proves those who invest in them to conceivably substantial losses – often matter little.

Instead, clients see the chance of quick profit or at least an enjoyable ride.

Demi Staal, a 27-year-old electrical engineer based in The Hague, holds a portfolio of altcoins worth around $8,000.

Amidst his premature plays: a 30 euro ($36) bet on Shiba Inu, a Dogecoin spin-off that briefly became one of the 20 biggest cryptocurrencies this month.

“I think it’s a joke coin, just like Dogecoin,” said Staal, who multiplied his money on that transaction. “I saw it listed at my exchange a few days before and was like ‘oh, this is fun, I’ll buy this.”

Along with forecasts of fun and gains, however, altcoins are tormented by volatility.

Such fluctuations in price can bequeath investors massively out of pocket and, unlike bitcoin and depending on the governing structure of the exchange on which they are bought, many can only be exchanged on transfers for other digital coins rather than cashed in for hard money.

As investors pile into rivals, Bitcoin’s share of the crypto market has slumped to around 45% from 70% this year, according to U.S. researcher Coin Metrics, while its trading volume share at major exchange Binance has halved to 23%, data provider CryptoCompare says.

Its market cap settles around $800 billion and, while all cryptocurrencies proceed to move outside the mainstream global financial system’s supervisory framework, it is more broadly believed for payments than its companions.

The second-largest coin ethereum is catching up, becoming risen more than four-fold this year to around $380 billion as more peer-to-peer “decentralized finance” crypto lending platforms have commenced using its blockchain.

Ethereum’s surge has triggered wider interest in the altcoin universe from retail investors with funds to burn, part of a course that has also stoked the use of exchanging apps like Robinhood and powered a social-media-driven gathering in stocks including GameStop Corp (GME.N).

“The fact (the crypto market) is 24/7 makes it more convenient for people who are operating,” said Amar Rai, a 25-year-old risk authority whose crypto purchases have doubled since March last year.


Half a dozen distinct altcoin investors, all gentlemen in their 20s, told Reuters they based their judgments on knowledge gathered from sites like Reddit, Twitter, and TikTok.

As coins such as ethereum – whose backers say it will remodel finance – grow, that use of social media biases as a source point has meant others with few such prospects have also inflated.

Get Dogecoin: Commenced as a joke in 2013, its logo emphasizes a Shiba Inu dog extensively used in memes. But that has not sunk its climbing.

It has flown over 10,000% this year to becomes the fifth-biggest token with a market cap of over $60 billion, but that rise has not corresponded with any growth in mainstream usage for payments, and with an extensive stock it lacks the poverty that has attracted inflation-warier investors to bitcoin.

Instead, it has gained impulse from the tweets of a prominent patron: Tesla boss Elon Musk.

Dogecoin last week jumped about 25% after Musk said he was working with its developers to boost its effectiveness. It had beforehand collapsed by a third after Musk called it a “hustle”.

Staal, the investor in The Hague, said he latterly lost out after buying Dogecoin.

“I purchased some a couple of weeks ago, just for fun,” he said. “I just put a couple of hundred euros in there. It didn’t shake out for me though – I bought it at the mistaken time.”

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