DeFi & The Altcoin "Season" - What's Next?
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DeFi & The Altcoin "Season" - What's Next?

By Thomas Wolf | Thomas Wolf's Den | 29 Aug 2020

Due to a massive increase in popularity with DeFi (Decentralized Finance) oriented tokens and crypto-related projects, many people fear an "Altcoin winter" is on its way.

DeFi DEX's demonstrated a 500% lead over centralized exchanges in recent months, so it's hard to blame them!

Bitcoin has been fairly stale with the exceptions of the 12K pump and the more recent drop.  "Altcoin season" is apparently when altcoins are doing well, which most people seem to expect is a result of Bitcoin correlation - and why shouldn't they, that is almost always what controls the altcoin market.

One must ask, however, how long will that correlation trend last, and have we already seen it start to end?  The answer is yes - we have.

Now, here is where people are getting lost.  Just because DeFi is doing well while Bitcoin is currently "slow" does not mean everyone is going to dump all of their Bitcoin (BTC) and altcoins such as Ethereum (ETH), Tezos (XTZ), BAT (Basic Attention Token), Stellar Lumens (XLM), Litecoin (LTC) and more.

It's important to note the entire crypto market is doing well, far above stocks - so to call the current prices cheap is a stretch of the imagination.

Some will dump altcoins into DeFi opportunities, of course - but not all, that's ridiculous.

Where some see a problem here I see countless opportunities for investments.  The confusion in the market right now is going to create a little chaos in an already volatile market due to people dealing with an unprecedented situation in cryptocurrency history.

I do not believe altcoins will all perish due to DeFi.  I'll explain why, and it's not very complicated.

Once again, social support surrounding these tokens is too strong for people to abandon them entirely.  Over the last several months I've watched several altcoins start to behave in ways that did not correlate with Bitcoin - Basic Attention Token (BAT) is a good example of this with some really impressive gains well above the Bitcoin correlation percentage.

Now that these coins have well established communities and HODL'ers, stakers, and traders - they are not going anywhere unless they do not serve a purpose.

I feel Litecoin is most likely to be rendered useless and I absolutely will not invest in it; its goal of becoming digital silver fell far short and now we have even faster and more secure coins/tokens which is the primary reason people use it instead of Bitcoin.  Long live Nano and XLM!

So, say a currency has a purpose.  Ie, Tezos offers staking rewards - and people's main argument against that is that so do other newer currencies which are boasting a higher APY % in order to draw people away from Tezos and other pre-established services like it.

But, here is the thing - there is no way to know which will end up higher or lower in value, so that annual yield percentage is relative at best - I'd rather have 6-8% of something than 20% of next to nothing.

Stellar is fast and has low fees.  A lot of people are taking advantage of ChangeNOW's service by using XLM which tends to have the lowest exchange minimum, as well.

BAT is directly backed by the Brave browser and several crypto communities, including Publish0x.  BAT remains my #1 long term bet for success for this reason.  It's not going anywhere.

Ethereum 2.0 is on the cusp of its evolution.  I can't help but laugh at Ethereum dumping hard because it has had a bull run of its own, something that also does not correlate with past Bitcoin behavior to the degree of which it happened recently.

Bitcoin has the greatest following of all, without question.  I am patiently waiting for the day that it steps down and crowns a more efficient token such as Nano - but that could be years from now, and probably will be.

So, where to go from here:  Stay loyal! If your altcoin has a purpose, don't buy the FOMO.

However, if your altcoin is "useless" and other coins/tokens have a clear advantage over them, you may want to consider changing your loyalties because you are holding something with no purpose while people invest in things with a purpose.  Simple enough.

If you are simply scared of a big dump - I say move your currencies into DAI or USDC and get APY % earnings until the market stabilizes.  You should never have more out than you can risk losing anyways!  This isn't the direction I will be going in, but it's always there for those who cannot afford to live lavishly.

I start fall semester on Monday.  I hope I'll still be able to generate content alongside my work and school responsibilities; I am planning on a very odd schedule.

Questions and comments are always welcome.

Stay smart & Stay safe!

-Thomas Wolf

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Thomas Wolf
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Technical Researcher, Writer & Editor. Cryptocurrency & Blockchain Technology Advocate, STEM Student, Self-Taught Techie, PC Gamer, Nature Enthusiast, DIY Specialist, and Market Trader.

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