When the Bitcoin price drops sharply, even the most well-known altcoins fall much more than Bitcoin. What are the reasons for this?
If we look at past Bitcoin price movements Bitcoin When it drops like 10%, Ethereum close to 15% and other altcoins There is a decrease of approximately 20%.
In fact, such movements have been and still are seen frequently in the crypto asset market. of this situation There are several different reasons:
The amount of money available in the Bitcoin market is more than that of altcoins.
Bitcoin is the most well-known because it was the first crypto asset; represents the entire crypto market and at the same time Bitcoin is the most valuable crypto asset by market value. Most of the money circulating in the crypto asset market is first in Bitcoin and then in altcoins.
Since Bitcoin has more buyers when it declines sharply, its price increases with a decline of, say, 10%. may remain limited. However, since there are fewer buyers in altcoins and thus less purchasing power Therefore, these sharp declines will be greater than Bitcoin.
Bitcoin is a safe haven asset while altcoins are speculative assets.
Satoshi Nakamoto’s invention, Bitcoin, is completely is decentralized And digital gold claims to be. For these reasons, Bitcoin is even within the crypto asset market. safe harbor existence acts as.
Altcoins are They are assets developed as alternatives to Bitcoin, that is, speculative assets. Therefore, when Bitcoin declines, altcoin investors fear increases and prices fall more sharply.
While Bitcoin’s purpose is clear, altcoins are still evolving.
The purpose of Bitcoin is An electronic payment system without intermediaries is to be. The purpose of altcoins is not clear.
There are more than 26,000 altcoins in the market and all of them both different from each other and still evolving is in the process. Especially the fact that there are developer companies behind altcoins deeply affects the price movements of altcoins. This effect positive or negative It may be in the direction.
The altcoin market is more dependent on news and new developments compared to Bitcoin.
Although Bitcoin is the most well-known crypto asset legal regulations And hack‘s It may be affected by news such as. On the other hand, altcoins are protected from such developments. much more is affected.
Trust in altcoin developers fell very quickly as Bitcoin price fell. disappears. For example, even if there is a small problem in the development team, company or community behind an altcoin, this problem will be reported to investors as the Bitcoin price drops. very big may come, and as a result, the price of that altcoin will drop sharply.
Altcoins with low market capitalization are prone to manipulation.
In the crypto asset market 26,000We said that there are more than 1 altcoins. The market value of 25,900 of them is currently It’s less than $500,000.
When an investor who trades with high amounts wants to buy these altcoins with low market value The price may rise sharply. However, while the Bitcoin price is falling, if this so-called investor wants to sell his investment, that altcoin The price may fall very sharply.
When do investors prefer to buy Bitcoin and altcoins?
Although Bitcoin is the most purchased crypto asset, in some cases Bitcoin is rising some altcoins It is rising more than Bitcoin.
Among the reasons behind this, as we mentioned above very important developments and in some cases, it is due to social media influencers making statements about that altcoin.
While the price of Bitcoin is falling, investors are generally interested in the crypto asset market. loses faith and both their Bitcoins It also sells its altcoins. While Bitcoin price moves sideways, investors By buying altcoins It wants to benefit from possible upward movements.
This idea essentially applies to altcoins. speculative asset It’s because they are. At the same time, professional investors are losing money after the price of the altcoins they purchased rises. By swapping against Bitcoin Increases the amount of Bitcoin they hold.
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