One thing you may have noticed is that these two cryptos have been dropping lower on market cap rankings. For instance, Zcash (ZEC) has already dropped out of the top 20. But that’s not to say that, they are not the only ones dancing up and down market cap rankings. So, what’s the future of these two cryptos? Do they have any prospects of a pre-2017 kind of rally? Well, that’s hard to tell, since even the 2017 rally itself was not anticipated. It just happened. However, from a pure fundamentals perspective, these two could be weakening.
That’s because, the greatest strength that these cryptos have is their privacy capabilities. However, many more cryptos are now implementing privacy features. For instance, Monero (XMR) is known for its fungibility, but it won’t be the only one with these capabilities for long.
Other cryptos like Litecoin (LTC) are looking to implement privacy capabilities, which will dilute the intrinsic value of privacy coins. As such, it is not surprising that they are slowly dropping down market cap rankings. Their value could be diluted even further, once Bitcoin (BTC) acquires privacy capabilities. This is not just a scenario that is unique to privacy coins. Once the lightning network gains enough momentum, most cryptos focused on payments could experience a significant dilution in value too.
Another factor that could weaken privacy coins is the never ending uncertainty over how governments might react towards them in the future. Governments have never been comfortable with privacy coins. In a market that already uncertain, investors could be moving away from cryptos that carry an extra amount of risk. This may explain the continued weakness of major privacy coins, even though the market is overall weak.
However, that’s not to say that privacy coins are doomed. They still have a huge potential both from a speculative perspective, and on the basis of fundamentals. From a purely speculative perspective, these cryptos have a huge potential of a huge pullback in a market-wide rally. One reason for this is their low supply. Zcash and Monero have a really low coin supply, and in the case of Zcash, the block rewards will be reduced this year. With such a low supply, it means that in an all-out bull market, these cryptos have the potential to gain value pretty fast. That’s because, lots of money coming in, and would be buying into a very limited number of coins.
From a fundamentals perspective, these two coins have it too. The biggest one is that they are still the best privacy coins in the market. While for other coins privacy may just be an add-on, for these two it is their core functionality. This means they are perfectly suited for making private transactions, and this gives them an edge in terms of long-term value growth. In essence, in a bull market, they have what it takes to rise pretty fast. It’s an interesting future ahead for these two.