Macro analysts are weighing in after the sudden collapse of two large crypto assets has sent shockwaves through the industry.
Macro Expert Lyn Alden inform 433,300 followers, many of which altcoin projects rely on a business model of intentionally losing money to generate revenue.
“If you were in the business of selling $20 bills for $10, your sales growth would be huge and the total market you could cover would be virtually limitless.
But, of course, it is unsustainable.
That’s basically the case with many altcoin projects and growth stocks that are consistently unprofitable.”
analyst addition It is only when the product itself is considered valuable when a company seeks to make a profit by raising its price.
“The idea of these business models is that you can usually raise prices after the initial cash-out phase.
And this sometimes works, but only if it’s really desirable for itself, not because the end product is ridiculously cheap.”
Alden conclusion Specifically, by removing the pegging from the US dollar, referring to the algorithmic stablecoin TerraUSD (UST), where the affiliate Terra (LUNA) cryptocurrency will split in fractions of a penny at $80 earlier this month.
“It was an idea at TerraUSD as well. It’s ‘let’s give people unsustainably high returns to attract people. And, perhaps, after enough time and scale, somehow people will want to use this structurally unstable object to pay for the real thing.’
Compared to unsustainable blockchain projects, Alden said last week that Bitcoin (BTC) has bottomed out in the mid-$20,000 zone and is now signaling that it may be approaching a “deep value” zone.
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