Last month I wrote about how Ampleforth (AMPL) had surged well past its price target and expressed some confidence that the coin had turned a corner and would maintain its value and market cap.
Well, I'm man enough to admit I was wrong...
Since the last week of Feb., AMPL has shed supply and market cap save for a brief respite during the second week of March. As of the time of this post supply stands a little over 340 million, around where we were at the beginning of February while market cap has drop by around a third over that time span. Ampleforth's price has stabilized in the 80 cent range over the past week without any strong signals of an impending breakout.
What's Going On?
This is a hard question to answer as AMPL has a very different structure when compared to other cryptos. The fact that the amount of AMPL you hold decreases when the price is below its target range can create a psychological effect that pushes holders to sell before they suffer greater losses, therefore creating even more downward pressure on the coin's value. Ampleforth's redbook talks about contraction and how it can be corrected upward back towards equilibrium, but this requires enough traders valuing the opportunity to buy up more of the network while prices are low to drive the price back up. For the past month it doesn't look like that's the case as transactions have tapered off significantly and volume has been heavily inconsistent.
Looking into it further, it's become apparent that the Ampleforth team has not yet been able to build up enough interest for AMPL to function properly. Its price volatility makes it no better than other coins when it comes to being a collateral asset and for all the talk of being a synthetic commodity-money...you can't really BUY anything with it. I mentioned in my first review of AMPL that I felt that acceptance in everyday commerce would be important to establish a steady floor and help maintain equilibrium, but so far I haven't found any site that accepts AMPL in exchange for goods or services (If you know of a site that does, please let me know in the comments below!)
In order for any currency to have value it must be able to be used. For Ampleforth to meet its design goals it must find a way to improve its acceptance and use cases so that demand, and therefore supply and market cap, can grow to a point where AMPL can maintain equilibrium for significant periods of time.
This project isn't doomed by any stretch of the imagination, but there is a risk that Ampleforth may fade from relevance before it can achieve its' goals. I believe the next month will be critical for AMPL to at least cross it's lower target line of $0.97-0.98 and stop the bleeding of supply. From there if it can maintain some level of stability confidence can be rebuilt in the coin and we might see some more investment pushing us into positive growth territory.