Bitcoin and altcoin price speculation

The last few months have brought great change to the cryptographic currency markets. Clear trends include the continued rapid increase in total market capitalization of all cryptocurrencies, and the return of Bitcoin's preeminence since Segwit adoption, which fended off Ethereum's relative rise through a flippening that was growing in momentum prior to it being clear Segwit scaling would go ahead. So we've seen renewed spotlight placed on Bitcoin, which has seen it rise in price in recent months at the expense of a relatively more stagnant Ethereum. The continued rapid growth of many coins has also been clear, in a market that has seen more or less continuous exponential growth since the start of 2016.

Privacy oriented cryptos have also enjoyed exponential growth. It was interesting to note that the major privacy oriented coins held up very well during the recent sharp sell-off in Bitcoin, a reassuring sign because the altcoin market has often amplified any fall in Bitcoin - but in the most recent drop altcoins did not underperform, and in fact privacy coins actually outperformed during the sell-off.

Dash, Monero and Zencash are all at or near their historic highs. Zcash in the high $200s remains about $100 off its historic high. One suspects everyone in the market already knew Dash had staying power, but Zencash's fourfold rise in recent months may well have gone quite a way to instill confidence in this relative newcomer and its development team. Zencash was helped by steady development, including development of its unique Secure Nodes system which is now very near the end of its testing phase and soon to be pushed out to the live network. One could argue it has also benefited from learning from Dash's proven effective funding model, which it adopted, whereby some of the block reward is paid into a fund for coin development.

Over the last several months, Zcash has been the most stagnant in terms of price, but this has been off a high base to begin with. Monero benefited from being listed on Bithumb, with a doubling on confirmation that it would get listed, an increase that it has retained and that seems locked-in for the near term at least.

Of these four coins the two that appeal most to this investor are Dash and Zencash, whereas I'm neutral on Zcash and negative on Monero (which doesn't necessarily mean I think Monero will go down, as a rising tide can lift all boats).
Let me firstly explain why I am negative on Monero, and I am not saying this in any way to antagonize the Monero community. These are just my views as a trader. I am negative on Monero because it has too much inflation and an unfinanced development model.

Let me start with inflation. It is a fairly established concept within cryptocurrency that coins with lower total supplies are generally more valuable per coin. If you go onto coinmarketcap.com and compare prices PER COIN, you can see that there is a very strong relationship between circulation and total coin supply and price.
This has nothing to do with total marketcap, and so for instance Ethereum has a much higher marketcap than Dash but at present Dash is worth around $430 to Ethereum's $330 because it has a lower circulating and maximum possible coin supply.
A lot of coins like Dash and Zencash followed Bitcoin's template of 21 million maximum coin supply. But Monero didn't, and it has a higher rate of inflation and total maximum supply. It is intuitive and common sense that the circulating supply of a currency impacts the value per unit of that currency. After all we've seen numerous times that excessive supply of currency through central bank money printing lead to hyperinflation, and indeed one of the main drivers for the high valuations of cryptocurrencies is that their maximum supplies are algorithmically fixed.

But supply is something that cryptocurrency investors sometimes overlook or do not give sufficient weight to. And it is a big problem for Monero's relative market price over the short to medium horizon outlook. To put it in perspective there are roughly the same number of coins in existence for Monero as for Bitcoin, despite Bitcoin being mined for several years before Monero was launched, and there are roughly double as many Monero as Dash in existence despite Dash launching and being mined from a few months before Monero. In this regard comparing Dash and Monero provides a useful demonstration of the importance of supply, with Dash's price per coin nearly 4 times Monero's.

The other problem with Monero is it does not have a funded governance model, unlike Dash, and unlike newcomer Zencash. Which brings me to Zencash, the other privacy coin I like. Zencash has a funded governance model where some of the block reward goes to pay for development. This is showing its value, as Zencash has tripled in price in less than a month up to the present time. In my view, this has been because its funding model facilitates development.

There is also another reason Zencash to me to appears have the most potential to rise in price. Coins with small marketcaps have more opportunity to increase by orders of magnitude than coins with large marketcaps. Dash has already over the years risen 100 fold to be worth nearly $3.5 billion. If it were to increase another 10 fold, it would immediately become the second most valuable coin after Bitcoin. Possible, but not likely. However if Zencash which currently has a marketcap of around $55 million were to increase 10 fold, it would be worth just over half a billion. This is far more likely, in my view, as there are a couple of dozen coins sitting at around the half billion plus valuation. The point is low marketcap coins have greater opportunity to grow by orders of magnitude than large marketcap coins.

Finally, Zcash, which has a solid management team. But given its already relatively high valuation, and relative price stagnation, I tend to see it either trending sideways or increasing but only moderately in the near term.

Well, these have been my thoughts on privacy oriented cryptos. Consider these thoughts, but always be your own advisor, and think critically about everything in the crypto space. Good luck, and may you make a small fortune.