We have seen in the crypto markets that massive altcoins become history in cycles that have been going on for years. The majority of the top 100 cryptocurrencies have changed over the years, with only a few surviving. Now, a famous Bloomberg analyst believes that the same thing will happen again, and he even mentioned which altcoins will die.
The Future of Ethereum Competitors
Jamie Coutts, a crypto market analyst at Bloomberg Intelligence, stated that popular Ethereum competitors will soon die. According to Coutts, there are similarities between “zombie” companies traded on the stock exchange and layer1 blockchain projects that have seen a decline in demand.
“The alternative L1 blockchain landscape reminds me of zombie companies in the fiat world (EBIT [earnings before interest and taxes] > Interest Expense). I believe that cryptocurrencies will get rid of them in the not-so-distant future. Insufficient demand (fees) + high inflation = negative profitability.”
According to the graph, the Ethereum network made over $500 million in profit in the second quarter of 2023, while other layer1 solutions experienced a decrease of over $1.5 billion.
Aptos, SUI, Solana, and Others
During the 2021 bull season, Avalanche and Solana were the most popular layer1 solutions. However, these two layer1 projects had to compete against numerous rivals as the bear market continued. Especially Solana experienced a massive decline in TVL power due to being abandoned by institutional investors. Moreover, increased competition and attacks from Ethereum L2 solutions also negatively affect the future of Ethereum killers.
Coutts suggests that “zombie” companies and layer1 projects may attract investors due to their potential. However, he emphasizes that with the Federal Reserve’s high interest rates, these speculative investments are less attractive and many of them are likely to come to an end due to this policy.
“To explain, 23% of the Russell 3000 are ‘zombie’ companies by definition. People will pay for potential growth, and for some, it will eventually result in profitability. The problem is the new interest rates. The same applies to Ethereum killers; some will survive and thrive, but we will see many of them being wiped out.”
Time will show whether Coutts is right or not.
