Alden: Altcoin Sector Full of Landmines

Macro guru Lyn Alden, who was a guest on the Hedgeye podcast, warned that altcoins could be crushed due to regulatory pressure combined with excessive leverage, while the biggest cryptocurrency Bitcoin may not be affected.

That’s why I separate Bitcoin from the rest of the cryptocurrency market. I think the noise to signal ratio for the rest of the cryptocurrency market is unfortunately too high. I think there’s still a lot of foam to run off and we’re seeing more and more regulatory blows being struck against this area. Regulators basically define what a security is, which assets violate securities laws, and which companies violate securities laws by selling those assets to the public. I think this whole area is full of landmines. Going forward, I suggest being very cautious about allocating significant capital to this area.

Alden noted that the largest cryptocurrency would be exempt from most regulatory sanctions because it looks more like a commodity than a security.

I’m putting Bitcoin in a different category because it’s not a security, it’s considered a digital commodity because it didn’t pass the Howey test. I also think that the foundations of true decentralization are stronger, and I think that much of the bubble in the Bitcoin space has already been laid. Most of the tourists who came during the disastrous bear market are gone.