Before buying new and cheap digital currencies, this is what you must know

Has there really been a large number of cryptocurrencies… and is this asset class becoming crowded?

• The number of cryptocurrencies has risen to the level of 10000
• The exponential growth of cryptocurrencies
• New cryptocurrency generated by speculation
• Many tokens will turn into dust collectors
• Commitment to the highest levels of currencies with strong liquidity

Earlier this month, Elon Musk threw a bearish curve on the prominent crypto asset class. At the beginning of this year, Tesla (NASDAQ:TSLA) bought $1 billion in bitcoin and announced that it would accept the digital currency as a way to pay for its electric vehicles. Tesla’s revolutionary electric cars have been at the forefront of tackling climate change by reducing reliance on fossil fuels.

While Bitcoin and many of the nearly 10,000 other cryptocurrencies are revolutionary in financing electric cars for travel, token mining requires huge amounts of energy. Mr. Musk suddenly decided that the power requirements for bitcoin mining were a problem that went against his moral compass.

He changed his mind and stopped accepting Bitcoin at Tesla. This decreased the price of the cryptocurrency. After trading above $65,500 per token on April 14th. On May 19, Bitcoin fell to the $30,000 level after Musk’s announcement. Although it has recovered somewhat since then, trading has remained choppy across the entire crypto asset class.

It’s hard to believe that the crypto asset class, which has a market capitalization of over $1.7 trillion, now includes nearly 10,000 tokens. The astonishing gains of Bitcoin, Ethereum, Dogecoin and many more have sparked speculative activity for those looking for the next currency that will make them a fortune.

Has the asset class become too crowded?
The number of tokens has increased to 10,000

It seems that only yesterday the number of cryptocurrencies in cyberspace broke through the 1000 level for the first time. On May 19, the number was close to 10,000.

Participants of currencies Alno.ahmcharko markets markets digital currencies ,
participants in the encrypted currency market
encouraged stunning returns, provided by the currencies Alpetkoan and Alaithirom ETH / USD and Digkoan DOGE / USD and other encrypted currencies leading , which saw big gains in the market to a range of $ billion, the emergence of new symbols on the market every day. The ICO market has exploded, and it has become a very profitable business for those arranging to offer tokens.

The sheer size of the ICO market has led to a miniaturization of the stock market IPO business over the past years. Ironically, the launch of Coinbase Global Inc (NASDAQ:COIN), the leading cryptocurrency trading platform, on April 14, found its way onto the Nasdaq via an unorthodox path.

Coinbase rejected the IPO and all the rules and regulations associated with it and the massive fees. Instead, it took the direct listing route, with the Nasdaq listing shares without the help of an army of investment banks. The popularity of the asset class has eliminated the need for investor promotions and other expenses incurred by traditional IPOs.
Cryptocurrency exponential growth I remember when the number of tokens on CoinMarketCap broke through the 1000 level, not long ago. I started tracking the rise at the end of the first quarter of 2019 when the number was at 2136.

At the end of 2019, the number had risen to 4,986, more than double over the nine-month period. On December 31, 2020, there were 8,153 cryptocurrencies. The global pandemic may have slowed massive growth last year.

As of the end of the first quarter of 2021, there are 9,045 tokens in operation, and on June 30, it can be bet that the number will cross the 10,000 level. On May 19, the number is 9,945 and is constantly increasing.

New Speculative
Cryptocurrencies Speculators are driving the markets as they add a steady level of liquidity. When speculators buy and sell assets, they are narrowing supply margins because of their activity

Producers, consumers, investors, arbitrageurs, traders and even all market participants benefit from speculative buying and selling. Speculators often receive attack from the press, regulators and lawmakers, but without them, liquidity will be in trouble.

I always find it interesting when politicians complain that speculators are driving up asset prices, causing consumers to pay more for products. The truth is that speculators are more likely to push prices down, but we rarely hear complaints when prices drop due to engaging in speculation.

Meanwhile, bitcoin pennies have risen in value to over $65,500 per token, and Ethereum’s massive move from less than $1 to more than $4,400 — along with several other crypto success stories within the digital asset class — has led to Increasing speculative frenzy. When my 88-year-old mother asked me whether or not she should buy bitcoin, I knew the market was out of control.

The rise of the market capitalization of the asset class has encouraged the premiere coin market as an expanding market that can be directed to participants who are looking for the next digital currency that will turn a small investment into a big fortune.

Many tokens will turn into clumps of dust It
is difficult to make an argument for the continued exponential returns of 10,000 crypto tokens. In biology, “survival of the fittest” was a concept from Charles Darwin’s On the Origin of Species, published in 1869.

Darwin suggested that organisms that are best adapted to their environment are more successful in reproducing. For cryptocurrencies, we will likely see a financial version of survival of the fittest over the coming months and years.

The speculative frenzy that ignited the ICO market and pushed the addressable token market to the 10,000 level is due to a basic sifting of these crowds, to reduce the numbers by weeding out unwanted attributes from the asset class. The bottom line is that when gravity finally hits cryptocurrencies in a significant way, many of these 10,000 tokens will become nothing more than clumps of computer dust in digital wallets.

However, cryptocurrency has made some of the leading financial minds look foolish over the past years. JPMorgan CEO Jamie Dimon called cryptocurrency a “scam” in 2017. Today, his bank offers its high net worth clients a cryptocurrency fund.

Renowned investor and CEO of Berkshire Hathaway (NYSE: BRKa), Warren Buffett, said bitcoin was a “financial poisonous mouse trap” around the same time. While he has remained quiet on the subject over the past months, his partner, 97-year-old Charlie Munger, recently asserted that cryptocurrencies are “dangerous to civilization.” My mother, who is only nine years younger than Munger, is still eager for the prospect of big profits from the asset class.

Digital currencies are here to stay. However, the asset class must mature by addressing several issues that will increase the profile as a major asset and medium of exchange. So conservation, cyber security and the carbon required for mining are all core issues.

Meanwhile, the most important gap to fill is the shift in financial ideology that rejects government control of money. Regulators and lawmakers will desperately seek to hold onto the power that comes from controlling and manipulating the economy’s money chains. The current monetary and fiscal policies may promote the rise of cryptocurrencies, but they are tools that governments will not abandon.

We will see a peak in cryptocurrency numbers over the coming months. While the significant decline may come after a significant correction in prices and overall market capitalization of the asset class, which we saw little of in early May.

Commitment to the highest levels of highly liquid currencies
In trading and investing, liquidity is critical, as it allows market participants to enter and exit risk positions. Buying or selling an asset with limited liquidity exposes one to a much higher level of risk.

Although I might spend a few dollars on some smaller emerging cryptocurrency, these investments are a long opportunity that is unlikely to pay off, and I am expected to lose every penny invested. However, trading is another story, as I follow trends in the markets as they reflect the herd mentality of a wide range of market participants.

I will only trade cryptocurrencies with market caps above $1 billion as of May 18, which includes less than 100 coins. Increased trading requires higher levels of liquidity. So, my limit would be markets over $10 billion. There are only 17 cryptocurrencies, or 0.17% of the asset class, that have that critical mass.

Think about biology when approaching the crypto asset class since there are so many tokens in the cyberspace. Most of those coins are sponges that eat up your investments with no hope of any return. The fittest will survive because the market will eventually sift through the herd.