The frenzied rally of cryptocurrencies have created vast fortunes to those who took the risk to invest in them. But after the jump comes the fall with financial analysts warning of a collapse of thousands cryptocurrencies and market contraction in the coming years.
Speaking to CNBC, they argued that thousands of the 19,000 cryptocurrencies and dozens of blockchain platforms that exist will disappear in the coming years with Bitcoin and Ethereum being among the only ones to survive.
The recent collapse of the so-called algorithmic stabelcoin terraUSD and the related digital token luna, which caused a shock in the market, turned the spotlight on the thousands of cryptocurrencies that exist and the possibility that they will all survive.
“One of the results of what we saw last week with the Terra issue is that we are at the stage where basically there are too many blockchains in the market and too many tokens. And this is confusing users and even causing risks,” CNBC’s Bertrand Perez, CEO of the Web3 Foundation during the World Economic Forum in Davos, Switzerland, last week.
“The crypto market is like the one at the beginning of the Internet, where many dot.com companies appeared which were scams and without any value and then the landscape cleared. That’s how it will be with cryptocurrencies. We will have useful and legitimate companies.”
Brad Garlinghouse, CEO of cross-border blockchain payments company Ripple, said that it is likely that in the future cryptocurrencies will be evaluated to keep only those with the highest scores.
“I think there is a question about whether or not we need 19,000 cryptocurrencies when the national currencies around the world are no more than 180.” – Garlinghouse said.
Even harsher in his statements was the Guggenheim’s Director of Investments, Scott Minerd, who argued that “the most cryptocurrencies are junk” and the only ones that will survive are bitcoin and Ethereum“
The unfavorable comments from the industry come as the cryptocurrency market continues to be negatively pressured with bitcoin remaining at lows below $30,000.
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