A warning about the altseason 2021 — Loft Financial

We are bullish as hell this period and it goes without saying. Everything is bullish from Marc Cuban and Michael Jordan talking NFTs, from JPMorgan and all other banks wanting to serve their clients Bitcoin, to Biden giving away trillions making a case for the demise of money and the escape to the new global currency system. That’s all good and there are many similar things to say about Ethereum and some other smart-contract platforms. We especially like platforms from the beginning since everything runs on them. DEFI? Runs on a platform. NFTs? Run on a platform. The next craze? You name it. Investing in platforms makes you fad-resistant. So what’s not to like about this altseason?

Valuation

As Cathie Wood likes to say, Bitcoin and Ethereum (I added the second one) are nowhere near their top because their proposition is much more valuable than that. Replacing gold, providing a global hard currency and a new decentralized Web 3.0 is something difficult to put a price on. What about the rest though?

The point is very easily made by comparison and we will let you compare.

Ginkgo Bioworks is a revolutionary biotechnology company and the biggest yet that is private. They created a platform that allows other companies to grow bacteria for a number of new use cases. This field is called synthetic biology and it will supposedly mark a big breakthrough in mankind capabilities of manufacturing new materials & drugs. They are profitable, have a product and have big clients. Their valuation in 2019 was $ 4bln.

The below crypto projects also have similar or higher valuations:

*If you don’t fully understand the concepts of fully diluted market caps please refresh your memory in our previous article called “the definitive guide to altcoins”.

Theta (THETA) is a blockchain powered network purpose-built for video streaming. Current users amount to maybe 2k and with a few streamers. Twitch was valued at around $4bln in 2018 when they dominated the market.
Current Valuation $ 12bln.

Filecoin is a decentralized storage system (think of a subset of services that are offered from AWS,MS etc). Recently launched. Current Valuation $ 13bln. Fully diluted valuation $433bln. ** Yes if you are buying FIL now it means that you are paying a price as if the company is valued the same as VISA or Berkshire Hathaway….We have no words.

Dogecoin (DOGE) is based on the popular “doge” Internet meme and features a Shiba Inu on its logo. This is a project that was just copy pasted from an early Bitcoin codebase and then abandoned by its developers only to be resurected by Musk’s memes on Twitter. Current valuation $ 7bln.

Kusama (KSM) Self-described as “Polkadot’s wild cousin,” Kusama is an experimental blockchain platform. In other words it’s the testnet of Polkadot. A testnet. Current valuation $ 4bln.

Conclusion

I leave the conclusion to you if those valuations are realistic, sustainable and a good investment. Our conclusion is that the altseason can produce a lot of wealth in the short term but ultimately extremely very few projects will survive and deliver the promise of a new financial system. You need to time it and not get caught up in it like some of you did in 2017. Are we at breaking point yet? Nobody knows. Are many altcoins in a huge bubble? Yes, certainly.

P.S If you find value in this article please consider subscribing to the newsletter.

Disclaimer: The information on this site is for informational purposes and isn’t financial advice. We cannot guarantee that you will have the same results as we have nor can we guarantee that the information shared here is appropriate for you. This is not financial advice and not given by professionals.

Originally published at https://loftfinancial.com on April 1, 2021.

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The Loft Financial

The Loft Financial

Newsletter and blog about macroeconomics, stock market, real estate, alternative asset classes and cryptocurrencies.

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