Everyone who exits the old chain, obtains some value in the new chain, and the wealth effect as calculated from the actual net new capital flows, is 4x-10x.
I'm not sure how you're using the term "wealth effect" here.
In CKG case, there was $50k new money wanting in, which ended up raising the marketcap to $500k, making the wealth effect coefficient of 10x.
I'm actually not talking about spinoffs here. I just used the word "ledger" because that's one of my preferred terms for "coin" or "altcoin." I meant that the 90% will sell their allocations in the altcoin and buy more BTC, for the reasons mentioned above, and that I think this negates the small float effect.
Yes, you are talking about spinoffs, because in an
exit situation to a new ledger, the 90% does not have any allocations in the new ledger that they could sell unless they buy them first, negating your point instead.
we can say the effect should be mitigated/eliminated by arbitrageurs - as long as fairly basic market infrastructure is there.
I agree that if the old chain survives the initial crash without it causing a descent to abyss (BTC has many examples of survival!), then in the long term the valuations of the chains adjust to represent market perceptions. Yet as the science of determining a correct valuation for a cryptocoin is completely unestablished even in the best minds, not only in the markets, it may well be that in a "successful" 10% exit, the end state is much different than 90/10. I don't claim any reasonable powers to forecast, even after more research on the subject than most.
There is however the case that the old chain is destroyed by the initial exodus of capital and market crash, and the general loss of confidence that results. Just see what has happened to shitcoins.