Altcoins: From Gods to Stigmatized in Five Years

Altcoin Speculation: From Feeling Like Gods to Losing 80% of Savings

The crypto market lost $15 billion in minutes. At that moment, Tether's 24-hour trading volume—$11.212 billion—surpassed Bitcoin's $10.582 billion. An instrument created to mirror the dollar was moving more money than Bitcoin. No one could explain it. No one wanted to look either. Five years later, the hangover from that euphoria continues to affect everyone who bought near the peak.

A Market Moving More Money Than Bitcoin

The starting point of the debate is an uncomfortable figure: 10 million tethers were in circulation on January 1, 2017, with Bitcoin around $1,000. Today, there are 4.150 billion. For a segment of the market, this is the real origin of prices: liquidity issued at will that inflates BTC/USDT pairs and, consequently, everything tied to them. Suspicion grows when observing that the first major pair, BTC/USD, barely appears in the 18th spot in volume rankings: ahead of it are 17 markets trading against a token that claims to be a dollar without fully being one. It smells rotten, summarizes the most bitter take. And it's not a fringe view: in the midst of a $15 billion crash, some were simply asking, without irony, if anyone understood what they were seeing.

From Olympus to the Mud in a Single Year

The start of this story is a crash. A market that, at the end of 2017, approached a total capitalization of $290 billion, was bleeding out months later, with Ethereum trading at $85 at its worst. The hangover caught those who had entered near the maximum off guard. As another forum user recalled, an investor had placed 200,000 euros when Bitcoin was around $15,000, spread across dozens of projects; he later admitted to losing 80% of his savings and decided not to sell. 'I'll stay until the end.' The figure alone summarizes an entire cycle. Another episode, smaller but equally telling, was the loss of 498 Golem tokens—worth ten cents at the time—during the sharp decline. The humiliation wasn't due to the amount, but the timing.

Navigating those months required a notable dose of self-deception, and the market found it: the number one rule for ultimate perseverance was that those who hold on always end up well. In the long run, everyone goes bald.

The Developers' Cull

When money leaves, you see who was truly building. Amid the crash, one of the most important development groups of a veteran blockchain announced it was ceasing operations: with the market down, it couldn't be financed. What was striking was that its price barely moved, when a collapse would have been logical. The episode served to articulate the thesis that would permeate the entire winter: culls displace what doesn't hold up from the market. The dinosaurs were too large and inefficient.

A report on development activity in public repositories later confirmed this: programmers were concentrating on a few large projects while thousands of tokens born from the ICO fever were left without a team. The diagnosis became, for many, the only reliable compass: instead of trinc the price, trinc the code. Where there were people programming, there was a project. Where there was only a chart, there was smoke.

POW vs. POS: The Technical War No One Solves

The winter also brought salon fights. One of the most heated was between Proof of Work and Proof of Stake. One side argued that attacking a staking system costs nothing, as the same capital controlling the network can be used to assault it. The other countered that it's not free: acquiring the majority of the token requires a huge outlay, and once the attack is consummated, the asset tends to be worth zero, thus ruining the attacker. The discussion, Byzantine to the layman, always ended in the same place: some defended energy cost as a guarantee, others a trust system that cannot be bought. They took it so seriously that some even called Bitcoin a staking protocol without anyone batting an eye when refuting it.

The Pandemic Reset

In March 2020, the external shock arrived. With traditional markets crashing, the discussion split in two: those who saw the crisis as the definitive argument for crypto assets and those who warned that, in a catastrophe, the only thing that matters is the cash you have in hand. The data available then pointed to the latter: art auctions fell 20% and luxury car auctions nearly 40%, indicating that large fortunes were retreating and accumulating liquidity. Shortly after, that same capital went hunting again.

The response from central banks—zero rates, massive liquidity, digital currencies being studied in Sweden and half a dozen countries—ended up proving the first group right, albeit for reasons that had little to do with decentralization. Cheap money sought any refuge with volatility. It wasn't an ideological victory. It was, once again, a matter of open taps.

2021: The Same Story with Different Names

The comeback was vertiginous and selective. While Bitcoin and Ethereum moved with the parsimony of already mature assets, specific names soared: Chainlink hit an all-time high, Cardano heated up, and XRP doubled its value in less than a week, with Litecoin, YFI, and Dash surpassing 50% in a few days. In a single day, Ripple rose 25% compared to Bitcoin's 4%. The rotation towards infrastructure projects—payments, oracles, Layer 2s—replaced the project-less quick bucks of 2017.

The question that lingered was always the same: trend change or bull trap? Entering with the train already moving and experiencing a 20% cut in hours was a non-theoretical possibility. The market, the most seasoned said, discards anyone who isn't sharp or capable of holding for years. And holding, with 80% of assets in losses, is much easier to write than to do.

Bakkt and the Entry of Institutional Money

The arrival of serious capital brought its own paradox. The Bakkt platform was set to launch Bitcoin, Tron, and Ripple futures, and part of the market celebrated it as the grand entrance. Another part warned of the opposite: that the cryptocurrencies entering there would have their price fixed and be subject to a fractional reserve model.

The reasoning was not minor. The product needs buyers, and to have them, it must be made attractive, which in practice suggested an upward push before the launch. Meanwhile, the US regulator delayed its decision on VanEck's ETF until February 27: the stick and carrot that had been repeated for a year without anyone knowing when the rope would be cut.

The Pattern That Repeats

By now, the market has offered several diagnoses. One argues that the rise is sustained by exchanges hoarding tons of USDT and that volatilities aim to attract new fiat money into the system: it's artificially raised to $13,000, dropped to $10,000 to seem cheap, and real capital enters drop by drop. Another recalls that most cryptos remain closer to annual lows than highs, and that volumes are smoke. A third simply states that this is musical chairs and that there are currently five chairs for ten players.

The underlying problem isn't volatility. It's that the same industry that promised real utility continues to measure itself by quick gains. One project, according to a forum user's account, eventually admitted that its clients pay in dollars, not its own token, after years of selling the exact opposite. That, more than any crash, breaks trust. Because a crash can be recovered from. An unfulfilled promise, not.

With Chainlink at its highs, Cardano heating up, and a handful of new names asking for a chance, the sense of déjà vu is hard to shake. The same speeches, the same charts, the same promises of mass adoption. The only real difference is that there's now less smart money inside and more institutional liquidity waiting outside. How many more times can the cycle repeat before someone learns?