What will happen to the 20,268 cryptos if bitcoin falls behind?

news hardware What will happen to the 20,268 cryptos if bitcoin falls behind?

The ever-growing crypto sector

With these volatile price movements, Bitcoin has created a veritable empire in just a few years. Through these various bullish cycles, cryptocurrency has given many people ideas. Motivated by the invested amounts of money, some individuals and organizations have joined the adventure. Here’s how bitcoin got ranked in the rise of thousands of cryptos.

Now it’s getting easier and easier to create your own crypto. While some tend to solve problems or even meet the needs of this fledgling ecosystem, like Ethereum, another majority of cryptos have almost no utility – except for speculative potential.

Thus, after 3 bull cycles since the appearance of Bitcoin in July 2022, the crypto sector counts almost 20,268 cryptocurrencies of all kinds. Compared to the number of currencies in the physical world, i.e. 180, the number seems impressive.

But then what can they be used for?

Bitcoin and altcoins (shitcoins, tokens, stablecoins…): Not all cryptos are created equal

First, you need to understand that the cryptocurrency ecosystem is divided into two parts: bitcoin and altcoins.

Altcoins are all the other cryptocurrencies that share the market with Bitcoin. These different virtual currencies take different forms.

The corners

These are independent cryptocurrencies that use their own network to operate. They are more or less similar to how Bitcoin works.

stablecoins

Stablecoins are stable cryptocurrencies with real value. These are generally backed by a unit of currency ($1, euro, yen, etc.) and have allowed, among other things, to eliminate the volatility problems that reign in the world of cryptos. Therefore, most other cryptos must be bought through stablecoins.

tokens

Called tokens, the tokens use networks that are not their own. Unlike a cryptocurrency, the blockchain does not require a token to function. In this sense, therefore, it is easy to create, since it is enough to issue the token without worrying about the architecture of the network used to make the token work.

Because of this, tokens represent a clear majority among the 20,268 cryptos in existence.

DeFi, same coins or shitcoins, for the most virulent: those cryptos that will surely not survive the winter

The development of the second-place cryptocurrency, Ethereum, has spawned a variety of tokens.

Decentralized finance (DeFi) has brought many new cryptos.

The application of the famous smart contracts, which make it possible to reach a consensus when several conditions are met, has given the internet access to a new form of financial services. In short, these services are usually backed by cryptoassets to keep the protocols running. They can be divided into two sub-areas:

• Utility tokens used to access a crypto protocol’s services
• Governance tokens that allow decisions to be made within a decentralized organization

Meme coins or shitcoins

Aside from the aforementioned tokens, shitcoins remain the biggest mystery of cryptos. These cryptos generally have no utility, surfing on a trend, a meme, or even current events. However, despite the lack of consistency, some of its shitcoins have risen to the top of the crypto rankings. We can quote:

• the same 10th DOGE coin (billionaire Elon Musk’s favorite crypto)
• the Shiba INU, 13th overall

These cryptos are mostly the subject of fantasies on the part of investors. Several projects have raised colossal amounts of money with no justification whatsoever other than the law of supply and demand (and a good dose of speculation).

Only if most shitcoins can exist in times of upswing, during downswing it’s much more complicated…

Bitcoin leads the market

Among the multitude of existing tokens, many will not recover when Bitcoin falls for the umpteenth time. In fact, cryptocurrency dominates the entire market. Generally, when the price of bitcoin falls, other cryptos follow. This concept has a name: bitcoin dominance.

While bitcoin’s influence seems to be diminishing over the years with the exponential creation of various cryptos, bitcoin dominance still dictates the direction of the market. To be precise, Bitcoin still accounts for 38% of the cryptocurrency market.

Based on this observation, it is certain that several cryptos will disappear in limbo if Bitcoin falls again. The first victims will certainly be cryptos with no fundamental value and no added value. Thus, Pikachucoin and other mooncoins will visit $0 when crypto winter is confirmed. Out of more than 20,000 cryptos, it is a safe bet that more than 90% of them will not survive the winter. Also, as Bitcoin fell from $54,000 to $20,000, many of these tokens have remained on the sidelines.