Why are Altcoins Unregulated? (Why Altcoins Keep Falling)

Why are altcoins unregulated? Bitcoin has risen 10 times in the past year. Meanwhile, many altcoins have entered the mainstream view, but their trading prices have not reached their historical highs. The price has increased by 70% since the beginning of the year and even reached as high as 90% recently. Why is there no regulation?

If the ICO bubble in 2017 and 2018 made people think it was a “crypto winter,” that did not actually happen. In fact, since May this year, the US Securities and Exchange Commission (SEC) lawsuit against Ripple has shown that the company has been seeking to attract investors and enterprises to invest in other tokens by regarding XRP and other digital assets as competitors and attempting to raise funds by issuing a new token. However, this approach is not entirely correct and has not yielded any positive results. Therefore, they chose to abandon their plans to seek greater development opportunities. In addition, shortly after the US Commodity Futures Trading Commission took action against Ripple, they also announced the launch of a new product called RippleNet. According to a report, Ripple is currently working to provide services to companies that want to innovate using blockchain technology. However, the study points out, “Although the reputation of these companies may be bad, we still see Ripple being able to move forward in the coming months.” Unlike traditional financial markets, although the cryptocurrency industry has a wide range of value propositions, it cannot be classified as a legitimate investment tool due to the lack of regulatory agencies. For example, Ripple has submitted a letter to the court requesting to stop promoting XRP and its tokens to Americans. However, over time, Ripple has decided not to support XRP or any products based on XMR because XRP is a non-fungible token and is not supervised, monitored, or supervised by central banks.

As previously reported by Cointelegraph, the US Federal Trade Commission recently issued a major policy statement on XRP. The press release states that government officials believe that regulations should apply to all regulated activities, including XRP. Meanwhile, US Treasury Secretary Janet Yellen has previously stated that the US needs to ensure compliance with new regulations instead of banning the use of XRP. She added that “to protect American consumers from phishing attacks, a system managed by law enforcement agencies must be established. Clear regulations need to be formulated to ensure that these measures are not compromised or hindered.”

Why Altcoins Keep Falling

Editor’s note: This article is from Zhongben Xiaocong (ID: xcongapp), written by Xiao Congjie, authorized to be published by Odaily Planet Daily.

After the bull market at the end of 2017, altcoins have been in a downward trend, but now they have fallen by about 50% and have risen from the lowest point near $50,000 to the current price of nearly $42,000. Why do altcoins keep falling? It is because they are products born from overvaluation, undervaluation, and lack of value support.

Therefore, if we carefully analyze the historical trend of altcoins, we will find that many cryptocurrency investors have questioned altcoins and believe that they may just be speculative tools. Why does this phenomenon continue? Let’s explore below. (Bitcoin price and historical data source: Bitinfocharts.com)

The reason why altcoins can experience such large continuous declines is that they themselves have investment risks, and their returns are unpredictable. Due to their high volatility, they are easily affected by sell-offs. Moreover, altcoins cannot serve as an effective store of value to maximize their own interests. Therefore, when you invest your money in them, the market often brings you greater investment returns. However, this does not mean that your investment returns will disappear or decrease over time. Why do altcoins lack profitability? The reasons are as follows: First, most people do not care about these so-called “high profits.” People always hope their money can gain more returns to get higher returns. However, in fact, most people do not know how to do this while earning money. For example, when you transfer money or buy a credit card at a bank, the payment information you usually receive is complicated. Secondly, “buying in” does not mean making profits by selling. On the contrary, if you can make money in a simpler way, you can find alternatives in other things, namely stablecoins. Finally, many people worry that the performance of altcoins may cost them, especially for those who lack fundamentals. This situation is likely to occur. “Going long” is a good choice instead. One of the main advantages of altcoins is that they do not require much effort to develop new technologies. As previously reported, many projects require a large amount of funds for research and development. But in the short term, there is not enough information disclosure for various blockchain products and applications appearing on the market. Therefore, at some point, “going short” is an important factor. However, it is also possible to “lose money” where users sell their tokens to earn more income, resulting in partial loss of funds. Another important advantage is that they have strong scalability and security, so even the smallest blockchain applications may not provide the best trading experience.