Why the big three are booming and why it won’t last

The “big three” are Bitcoin, Litecoin, and Ethereum. These three coins are practically the only cryptocurrencies that new investors can easily purchase with fiat through sites such as CoinBase. They’ve also experienced explosive growth this past month. Why? Some may point to the successful implementation of SegWit in Bitcoin, or the upcoming release of Metropolis in Ethereum. While these certainly are big contributors to the price increases of these coins, a major contributing factor is demand for ICO tokens and various “alt-coins”.

That new investors can purchase the big three with fiat is enough on its own to inflate their price relative to other cryptocurrencies. But if new investors want to acquire any of the hot new tokens like 0x or even OmiseGo, their only option is to buy one of the big three and then trade it on an exchange, temporarily driving up the price of both cryptos in the process. Ironically, demand for what some Bitcoin-purists derisively term “alt-coins” or even “shitcoins” inflates the price for their own favored asset.

Today we saw a slight drawback from many cryptocurrencies’ all-time highs. $5,000 per Bitcoin is a psychological barrier point that is just too tempting not to cash out at. And because of today’s dip, and ongoing uncertainty over the possibility of another fork in November, Bitcoin will have trouble breaking that $5,000 barrier for a significant time at least until the November uncertainty has passed. We will likely see a repeat of the downturn in July where investors trade their coins back into fiat to wait for everything to blow over. And then heading into 2018, the big three will boom into new all-time highs.

But even if investors stay strong and hold for the coming months, the explosive growth we’ve seen this year won’t last forever. Caught up in the hype, some Bitcoiners are exuberantly predicting Bitcoin at $100,000 or even $500,000. However, as it becomes easier to buy more “alt-coins” with fiat, demand for Bitcoin and Litecoin will decrease, and the price will reflect it. Only Ethereum will remain in high demand for reasons other than speculation as it will still be needed to fund and power ICOs.