A useful reminder about the differences between cryptocurrencies, especially PoW vs PoS.
Proof of Work currencies, like Bitcoin and Ethereum, rely on mining for maintaining their ledger. Miners continually use electricity in order to solve cryptopuzzles and add new blocks to the ledgers.
Mining is thus an expensive proposition. Gone are the days when miners used to use stolen electricity. They are industrial operations for the most part now, and have power bills to pay.
As a result, there's constant downward selling pressure on PoW coins such as Bitcoin and Ethereum.
This just isn't the case with Proof of Stake currencies. The selling pressure behind a system such as Avalanche comes solely from the folks who made a lot of money and want to liquidate. It isn't constant, it isn't an inherent part of the protocol's operation.
The market has not caught onto this, and believes that if Bitcoin or Ethereum goes down, then Avalanche, Polkadot, and Tezos must go down with them.
Put differently, there are people and be institutions out there making "joint portfolio decisions" involving disparate systems with different technologies and different economics. That is, they are mixing apples with oranges.
The natural price trajectory, that is, the curve that the price would follow in the absence of news, of every PoW coin is downward. The new coins must be sold to pay external bills.
The natural price trajectory of PoS coins is sideways and horizontal.
The natural price trajectory of PoS coins is sideways and horizontal.
PoS systems do mint coins, but because the validators don't incur constant external costs besides fairly miniscule ones, there isn't inherent sell pressure on PoS systems.
Since markets reflect the collective beliefs of their constituents, an incorrect equivalence between disparate technologies will lead to spurious correlations. So we need to pass the word and educate.
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