No More Altseason? Altcoin Dilution’s Impact

It’s sometimes hard to believe that, in the beginning, there was only Bitcoin. As the years have gone by, more and more cryptocurrencies have emerged onto the scene, and a trickle, which became a flood, has now mutated into a tsunami.

The appearance just over a year ago of pump.fun supercharged the production of shitcoins, but many have been saying for some time that the ever-increasing supply of new coins and tokens has already far outstripped demand. Heck, we arguably have too many layer ones as it is without all the tokens that live on them. Capital is being spread too thin.

As the eulogies for altseason are plastered all over crypto Twitter, many now believe that the deluge of new altcoins has gone far enough. Surely, we can’t expect the rest of this cycle to play out like previous ones in such circumstances?

In today’s video, we address this thorny question, and examine to what extent the supposed oversupply of cryptos is spoiling the party. We factor in market structure, consumer behaviour, past cycles and much more besides to answer that most pressing question: is altseason cancelled? Our conclusions may not be what you expect…

You can watch that video here.

📈 Crypto Market Forecast 📈

Last week, both the S&P 500 and gold hit an all-time high, but crypto did not. This suggests that macro conditions are bullish, but crypto conditions are not as bullish, at least not yet. Once they are, then crypto could catch up to stocks in a big way. All that’s missing is a catalyst that will take BTC and altcoins higher. As it so happens, there are many potential catalysts coming up this week.

The one that springs most readily to mind is the ETHDenver conference, which starts today and will last until next Sunday. In case you missed it, most altcoins appear to be highly correlated with ETH. So far, ETH has underperformed, which could be part of why altcoins have underperformed. As such, a rally in ETH as a result of ETHDenver announcements could spill over into altcoins.

This is especially likely given that multiple other crypto projects will host side conferences and events during the same period. Ones to watch here are so-called ‘banker coins’, including Hedera and Stellar. Ripple could also make an announcement related to its highly anticipated XRP EVM sidechain, given that the EVM is the same smart contract engine used by Ethereum.

At the same time, the SEC has been rapidly acknowledging applications for various spot altcoin ETFs. This suggests that cryptos like Litecoin and Solana could get spot ETF products sooner than later. As we’ve seen with the spot Ethereum ETFs, however, approvals do not guarantee inflows. There would need to be a catalyst that motivates investors to allocate to these ETFs.

It’s possible that this catalyst could be the repeal of the IRS’s infamous broker rule, which the crypto industry is reportedly pushing hard for. The broker rule basically requires DeFi protocols to collect information about their users for tax purposes, which is practically impossible given their decentralized nature. This has resulted in a de facto ban on on-chain activity for US users.

Repealing this rule would be incredibly bullish for smart contract cryptocurrencies, since their primary demand drivers are all related to on-chain activity (DeFi lending, DEX trading, stablecoin payments, etc). Repealing this rule would involve passing a bipartisan resolution. If this sounds familiar, that’s because Congress once did the same thing for the SEC’s SAB 121.

Some of you might recall that the repeal of SAB 121 was subsequently vetoed by Biden. It’s safe to say that Trump would be unlikely to veto a resolution to repeal the IRS’s broker rule (specifically its expanded definition, which includes DeFi). Not only that, but Congress is exponentially more pro-crypto now than it was last year, as highlighted by Coinbase.

What this means is that crypto regulations are likely to fly through Congress, especially since they’re being passed as standalone bills, rather than provisions as part of a more contentious bill. A stablecoin bill is expected to pass Congress by April, and it could also have profound effects on smart contract cryptos given that they are the rails that power these stablecoins.

What everyone seems to be missing is the fact that these stablecoin regulations would make it possible for TradFi players to get more involved in crypto. The co-founder of Figure recently noted in an interview that many of these TradFi players are interested in high-speed cryptos, which could foreshadow outsized gains for the likes of SOL, SUI, and APT.

However, he also cautioned that the introduction of pro-crypto regulations would introduce thousands of new competitors to the crypto market. He revealed that JP Morgan is planning on launching its JPM stablecoin on Ethereum. While it’s hard to see a crypto-native stablecoin like USDP dethroning the likes of USDT or USDC, a TradFi native stablecoin could potentially do it.

This could end up being bearish for crypto in the long term, as most of the industry effectively gets absorbed by TradFi forces. This is actually something that Ethereum creator Vitalik Buterin once warned about. In the event of a blockchain fork, a dominant stablecoin like Circle’s USDC could determine which fork succeeds. Imagine JP Morgan having that power. Bearish indeed.

For what it’s worth, this will be extremely bullish for crypto in the short term, not just because of TradFi integrations, but also web2 integrations. Recall that Instagram once added support for NFTs. We could see the same thing happen again on a much larger scale thanks to positive crypto regulations, with social media and entertainment being the most obvious niches for disruption.

This future can be hard to discern when prices are crashing in the short term, but it’s a future that could come a lot sooner than we think, and the resulting rally could be truly unprecedented.

📖 Story Protocol 📖

Story Protocol’s $IP token was one of the best performers this past week. Its price action caught us by surprise, especially since most new token launches have been performing poorly for a while now.

That said, it may be a sign that the market is finally back to speculating on projects with solid fundamentals, instead of on hype-driven memecoins. After all, the $LIBRA fiasco has left most crypto participants with a bad taste in their mouths.

Assuming that’s true then, does Story Protocol have enough ‘fundamentals’ to see it continue pumping in the future?

Well, that’s exactly why we decided to do a short dive into Story Protocol today.

First, what is Story Protocol?

Story Protocol is a layer one blockchain that focuses on making it easier for creators and users to monetise their intellectual property (IP). After all, the IP industry is a massive machine composed of lawyers, creators, IP registries, and other intermediaries. Story Protocol claims this is a $61 trillion asset class that has far too many intermediaries making it difficult for the average creator to engage with.

These intermediaries supposedly fragment the governance and enforcement of IP rights. Additionally, the heavy legal costs that are often bundled with this process make IP enforcement a rich man’s game. The inherent transparency and global accessibility of public blockchain networks uniquely position them as a viable medium to streamline the provenance and management of IP rights.

That said, Story Protocol isn’t the first blockchain project to build something related to IP tokenisation. In fact, NFTs were one of the first implementations of tokenised IP. The idea of charging ‘creator royalties’ on the secondary sales of NFTs is an attempt at monetising this IP right.

What sets Story Protocol apart from every other project built so far is that ‘tokenisation’ isn’t its primary focus. Instead, Story Protocol focuses on creating a foundational framework that can be adopted universally. In other words, the stuff actually needed to make blockchain-powered IP management and licensing a reality.

Story’s protocol’s IP framework is made of three core components – the layer one blockchain (tokenisation layer); its proof-of-creativity protocol (programming and standardisation layer); and the Programmable IP Licence (legal enforcement layer).

The proof-of-creativity protocol is at the core of what makes Story Protocol unique. To put it simply, it’s a set of smart contracts that standardise the management of programmable tokenised IP assets. It’s the architecture that governs how these tokenised IPs can drive value for holders. This includes creating modules which unlock an array of abilities such as licensing, revenue streams from derivative works, access to global capital, etc.

By standardising this process, it creates minimal friction for users to onboard their IP. The layer one blockchain layer further amplifies this by allowing anyone to create new infrastructure layers on top of this standardised IP layer, creating far greater network effects than an ordinary tokenisation protocol.

As for Story Protocol’s Programmable IP License (PIL), it provides the legal framework connecting on-chain IP management with the traditional legal system. The best way to describe it would be to compare it to the SAFE agreement pioneered by YC. Likewise, PIL ensures any interactions and negotiations effected on chain can be off-ramped to the real world. The team behind Story Protocol compares PIL to USDC. They claim the PIL enables redemption for IP, just as USDC enables redemption for fiat.

Story Protocol’s $IP token meanwhile plays a critical role in empowering the economic layer of the protocol. Holders can use the token to participate in governance, staking and transacting on the blockchain layer (gas fees). It also includes a deflationary burn mechanism that follows Ethereum’s EIP-1559.

Speaking of which, over 58.4% of the token supply is set aside for the ecosystem, community, and incentives. This presents a long runway for the project to increase adoption through token incentives. Not to mention, PIP Labs - the team behind the project - raised $140 million in funding from VCs like a16z crypto. There’s considerable runway for the team to continue building even during the inevitable bear market.

In summary then, Story Protocol is truly promising, since it creates a foundation for large and small creators alike to openly state and list their desired terms of engagement with other projects. It democratises the process of IP licensing by making it easier for even small creators to collaborate with larger projects openly and transparently. If Story Protocol does indeed gain adoption, we imagine we could soon see a multiverse of smaller creative universes seamlessly interacting with each other (ie, tons of crossover episodes between TV shows, books, games and short stories).

This is a huge shift, and only time will tell if the market is ready for it.

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🔮 Video Pipeline 🔮

* Litecoin Update: Potential for 2025?
* Gemini Report: Key market trends that you need to know!
* Ai Agents Dead? Time to ditch your AI agent holdings?
* Trump Appointees: Who are they and what they mean for crypto?
* Top Staking Cryptos: Which should you have?
* FED Liquidity: Are the floodgates about to open?
 
🏆 What's New at CoinBureau.com This Week? 🏆

* DeFAI Explained: Can AI-Powered Decentralized Finance Live Up to the Hype?
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* CoinW Review 2025: Complete Exchange Overview

📖 Quote of the Week 📖

If the latest memecoin scandal taught us anything, it’s that fast money is illusive and deceptive. Scammers and fraudsters looking to prey on desperation tout memecoins as a tool to get rich quick, but this is an illusion. The sure fire route to long term success involves putting the hours in over and over again.

"There is no substitute for hard work. There is no such thing as an overnight success or easy money" - Henry Sy

Team Coin Bureau

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.