The crypto market is the most volatile global market at present. The fluctuations in the prices of coins in the market are rapid and can quickly turn a broke to a millionaire or a millionaire to broke overnight. Moreover, the crypto space has advanced, and the market is touching new heights every month.
The heart of space is Bitcoin since it is the first cryptocurrency and has the biggest market cap in space. It is the market’s almighty. However, Bitcoin does not enjoy space alone after the concept of Altcoins became mainstream.
Altcoins: Anything other than Bitcoin
The term itself is a combination of Alternative and coin, referring to the alternatives of Bitcoin. However, Bitcoin is the originator of Altcoins since most Altcoins operate on a replica of Bitcoin’s protocols and functions.
Altcoins dependency on Bitcoin price movement
Over the years, it has been observed that Altcoin’s price movement often follows the trend of Bitcoin to some extent. Bitcoin is the biggest player due to the immature market. If Bitcoin plunges down heavily, so the market would be. Similarly, if Bitcoin rockets, the major chunk of the market would be green. To put it succinctly, Altcoins’ prices are determined by Bitcoin.
Moreover, it is not stated anywhere that all Altcoin prices depend entirely on Bitcoin since not all Altcoins follow Bitcoin’s same protocols and mechanisms. Several coins fluctuate heavily or slightly opposite, or some may fluctuate even more toward Bitcoin’s trend than Bitcoin itself.
Measuring the independency of different Altcoins
Firstly, the coin which has to pair with Bitcoin to operate in markets is directly correlated to Bitcoin’s price movement to a certain extent. Coin pairs can be labelled as two assets that are compatible to be exchanged with each other for equal values. For, e.g., $10 of Bitcoin is used to buy $10 of ETH. This pair will be ticked as “ETH/BTC”. Prices of such coins (Pairs) move as the Bitcoin goes.
Moreover, then there are Altcoin pairs. Altcoin paired with Altcoin with a giant user base such as ETH, AVAX and BNB. Prices fluctuations of such coins are moderately independent. And the last type, Altcoins paired with fiat currencies, prices here fluctuate independently sometimes. However, the market is immature, and it is an initial period of the cryptocurrency revolution, no Altcoins are totally independent. All rely on Bitcoin in some way.
That’s the wrap; we can now say that the price movement of all Altcoins is dependent on Bitcoin in some ways. However, they might not follow its trend in instances. The price movements rely on Bitcoin since it has the biggest market cap in the cryptocurrency space, is paired with the majority of Altcoins to operate, and is the most traded coin, too. All Altcoins get a cold when it sneezes.
About the author
This article is authored by Suraj Santlani. He works as a freelance content & copy writer in Web3, Crypto and DeFi space. Suraj has been active in this space since a year in which he managed to work with numerous clients in the space including Coinbase. For any of the writing services, you can mail Suraj at Imsurajmls@gmail.com.