For a crypto asset to be attractive to traders, it must have a certain amount of liquidity. There is not really anything to trade without daily volume – and the latest findings show that 95% of altcoins fall into this category.
Thousands of altcoins are on the brink
Even with today’s small slump, Bitcoin dominance still holds over 70%, according to Tradingview.com. This means that the altcoins will be punished again.
2019 has been a terrible year for altcoins, with most ending the year lower than they started. Next year could be worse for the majority of them as liquidity and volume decrease dramatically.
At the beginning of the year, crypto analyst Willy Woo examined the liquidity of the altcoins and found that up to 99% of the altcoins are illiquid.
Today, The Block research director Larry Cermak also writes on this topic and comments: Most altcoins will go to zero not by price but by liquidity.
“95% of cryptocurrencies currently have no liquidity and another 2% have very little liquidity. Most shitcoins will not die from “price 0″, but from the fact that they have 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 brands. Only the top 20 of these altcoins have measurable liquidity.
Bitcoin currently has five times more liquidity than Ethereum. Bitcoin also has more than ten times the liquidity of all other cryptocurrencies – including XRP, BCH, Litecoin and EOS. Stablecoins were not considered in the investigation.
Bitcoiner Udi Wertheimer adds: The price cannot go to zero if buyers and sellers still agree on a price for a token. The deaths will come in terms of liquidity and there are thousands of altcoins that are unlikely to survive next year.
Even in the top 100, the volumes for the bottom positions on the list are very low – including Bytecoin, Electroneum, Crypterium, SNX, SOLVE and Centralality. Exceeding the top 100 by market cap literally shows thousands of altcoins without liquidity.
With a few exceptions, the end of 2019 is a repeat of the crypto winter 2018 for all altcoins.
Those who are most likely to survive another year need to be actively traded to promote the price action. The rest of you will probably end up in agony as they are slowly disappearing from memory.