Stablecoin adoption scores striking upswing despite lack of regulation

Stablecoins are competing with Bitcoin once again, as a new season is expected to take on the crypto market. Although Bitcoin is still the strongest cryptocurrency, sometimes the balance between BTC and altcoins is unstable, a common issue in the crypto market. Some of the best altcoins include Ethereum, Solana and Cardanol, which share standard features of working with smart contracts and digital applications. The Ethereum price USD differentiated itself from the ecosystem, but they are dependable. Indeed, their value together might not exceed Bitcoin’s since they’re competing with an all-time digital asset that went through numerous market shifts.

However, when Bitcoin’s dominance is reduced due to various factors, investors turn to altcoins to protect their assets and diversify portfolios for more safety against volatility. The change between these two seasons occurs once every few years. For example, the latest Bitcoin season was one of the longest in a few years, but it seems like it will end soon when altcoins rule the crypto market.

What do experts say?

Recently, a few crypto analysts came to the conclusion that despite facing difficulties in getting legally regulated, altcoins will boom at any point now. The SEC is making considerable efforts to categorize cryptocurrencies. Still, they’re also taxing exchanges that seem to have crossed legal boundaries, for which they need to get a license by the end of 2023 to continue functioning within the US.

Investors, as well as companies, are affected by these actions because altcoins provide opportunities to access a new audience and market whose potential reaches millions of dollars. At the same time, some of these altcoins, such as Ethereum, can be used as both legal tender and an environment for developing apps, NFTs and other digital assets.

Analysts believe this is why altcoin season will explode because many businesses are approaching the altcoin model after PayPal released its own stablecoin, PYUSD, that broke the market. Even Mastercard is slowly integrating crypto within its operations, meaning that companies who assess innovation have already stolen the show.

Altcoin adoption is challenged by limited blockchain capacity

Although altcoins are backed by blockchains whose capacity is massive, allowing communities to create their apps with tools on the network, some of them are challenged by a lack of scalability. Compared to Visa or Mastercard, which process a considerable number of transactions per second, Ethereum, for example, is far behind due to network congestion.

Ethereum introduced many solutions to improve scalability that address different points of failure, some of which are the following:

  • Layer 1 Mainnet that does on-chain scaling;
  • Sharding allows databases to be split;
  • Off-chain scaling is done through optimistic rollups and state channels;
  • Layer 2 scaling handles the experience of users on the network;

Ethereum also made a significant switch from PoW to PoS, considerably lowering carbon emissions and making the blockchains more efficient. But there are many upcoming updates on the roadmap, so maybe they will change the network in regard to improved scalability and security.

Bitcoin halving might overcome the altcoin season

Bitcoin halving is a necessary operation that takes place around four years. During halving, mining rewards are cut in half to lower the number of coins supplied to the blockchain. The purpose of halving is to increase the demand for cryptocurrency, but prices might have the same 

path, and Bitcoin is already challenged by the crypto winter and its consequences.

Knowing what’s about to happen, investors and users might turn in to buy Bitcoin before the prices boom and then sell it during the halving. Increased transaction fees will also hinder this process because miners will be affected in terms of mining difficulty, so these prices will also surge.

Therefore, before and after the halving, Bitcoin will be the main attraction on the market, so that the altcoin season will suffer another downturn. On the other hand, it may be possible that altcoins like Ethereum will experience a massive demand after some time since the halving. That’s also because there’s a bull market forecasted in 2024, with most investors having an optimistic view of expanding their assets.

Investors have to be wary of certain market factors when choosing altcoins

Generally speaking, altcoins have benefit portfolios by being less risky and simply a better decision for long-term investment. However, their value can be affected by specific factors, such as the following:

  • Market capitalization indicates how stable a cryptocurrency is and its growth potential. Usually, a digital asset with a larger market cap is considered safer. Bitcoin is on top of the market regarding market cap, followed by Ethereum, Tether and BNB;
  • Technological advancement plays a vital role in whether a coin is valuable or not. While Bitcoin hasn’t improved much since its issuance, Ethereum made considerable efforts to develop the network;
  • The regulatory environment is the most essential in a coin’s development. For example, XRP has experienced numerous difficulties this year, with governments classifying it as an unregistered security. This affects its demand despite it being a great Ethereum alternative;

Bitcoin and altcoins will challenge each other

Bitcoin holders may consider that it’s the only coin worth investing in because it simply revolutionized the market. It withstands different conditions of the market and is the ultimate digital asset closer to regulation. However, investors are advised to have a look at altcoins, too, because Bitcoin is incredibly volatile and might expose portfolios to increased risk if it’s not improved adequately with altcoins as a safe net.

Therefore, both types of coins live in codependency, each balancing the other’s limitations. So, despite one of them ruling the market, investors might still choose both for safe long-term investments, while those coming for fast and massive income will have a different approach. Regardless, Bitcoin and altcoins will live together despite competing.

Final considerations

In recent reports, crypto analysts discuss how the altcoin season is likely to appear sooner than expected, and Bitcoin might lose some of its value, considering there will be less demand for it. After one of the longest Bitcoin seasons, it’s time for altcoins to regain fame and show what they‘ve got best.

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