There is a glut of cryptocurrencies and blockchain platforms. Bitcoin, the “canary in the coal mine” that warns of the collapse.
It seems that the cryptocurrency crash of a few weeks ago is just the beginning. There are currently more than 19,000 cryptocurrencies and thousands of them are likely to crash in the coming years, which will be accompanied by a reduction in the number of blockchain platforms.
Experts point to a glut of digital tokens and blockchain platforms as one of the main causes of what happened to the stablecoin terra and its associated digital token Luna, as well as the pressure on the cryptocurrency market. An example of this is that bitcoin has lost more than 50% of its historical maximum reached in November of last year. Ether, meanwhile, plummeted last week below $2,000, a level it has not yet managed to leave behind. However, the worst part is being borne by a whole series of cryptocurrencies that are in the shadow of bitcoin and that have dropped more than 80% from their all-time highs.
A Confusing Future for Cryptocurrencies
This excess of digital tokens and blockchain platforms is “confusing users”, which in turn is bringing “certain risks” for them, Bertrand Pérez, CEO of the Web3 Foundation, told CNBC at the World Economic Forum in Davos. from last week. Pérez compares the current cryptocurrency market to the dotcom bubble, when there were many companies that were a “scam” and “did not add any value.”
For his part, Brad Garlinghouse, CEO of Ripple, believes that only a “dozens” of cryptocurrencies will survive this situation and will manage to remain in the future. “In the fiat world there are about 180 currencies,” so “are 19,000 new currencies necessary?” asks Garlinghouse.
Months before the terra crash, Guggenheim chief investment officer Scott Minerd already said that “70% of cryptocurrencies are junk and will disappear.” More recently, he told CNBC that bitcoin could sink to $8,000 because “when it breaks below $30,000 on a consistent basis, that’s the ultimate bottom.” According to him, this cryptocurrency is the “canary in the coal mine”, which warns of the collapse of this market.
However, Minerd believes that bitcoin and ether will be among the few that will survive the collapse of cryptocurrencies. Furthermore, it is still waiting for an even more significant token to emerge, as it did when the dot-com bubble burst.
Terra Tries again with Luna
The creators of terra, with the Korean Do Kwon at the helm, have approved relaunching the project with certain changes, with the aim of seeing if they achieve a different result this time.
The plan is to put its associated token, Luna, back into circulation from scratch. The old version, the collapse version, will be renamed “Luna Classic” and, in practice, will have no value.
What many people are wondering is what happened to the $3.2 billion of reserves in bitcoin and other cryptocurrencies that Kwon had accumulated from the investments of its users, and which it had promised to use to defend the stability of terra against speculative attacks.
By Audy Castaneda
