Lots of people with vested interests in crypto succeeding and failing have produced various articles proclaiming that they comprehend the reasons for the market movements. This writer cannot with assurance, tell you! If I knew I would be very rich. This article does not represent any type of investment advice and are just some ongoing trends We have noticed whilst studying the markets.
Market movements are notoriously difficult to predict there are few more volatile markets than crypto alone. What exactly is clear is the fact, as a general rule: When Bitcoin sneezes, the world of crypto catches a cold.
Recent events have seen the complete market cap of all the crypto dip significantly. However, bitcoin slightly less than others and contains hence achieved 55% dominance in the entire crypto realm. This is actually the highest level since December last year. Possibly, as much see Bitcoin as the less speculative and a more stable offering. It has after all been around for the longest period of time.
Bitcoin will be the original crypto currency. It is the most popular of all of the crypto currencies. It offers the greatest price per coin of all the cryptos and is also often regarded as the “gold” standard of crypto. Bitcoin has the highest daily volumes, highest market cap and also the highest adoption. It also includes a relatively restricted supply compared to other tokens. These qualities ensure it is the coin market cap. Since the market matures as time passes we may well see this link fade in importance. It is actually quite probable that the times of “follow the bitcoin” will end soon.
When cryptocurrencies have such different value propositions and vary in the way that they are categorised, from currencies, utility tokens to security tokens, so why do their fates all seem so inextricably linked? Besides Litecoin most altcoins have almost no in normal with Bitcoin and its forks. Ripple for example, whilst being a form of crypto currency (so say a lot of people) it has a significantly different setup to Bitcoin.
One factor binding the price of crypto to the cost of Bitcoin would be the fact nearly every major exchange offers offers BTC trading pairs, where you trade BTC for alt coins rather than fiat or USDT. This places it firmly on the centre from the crypto currency world. When you glance at the cost of an alt coin in US dollars you are actually looking at the coins price in terms of Bitcoins exchange rate with US dollars. They don’t always move around in unison though. We have sometimes seen Bitcoin drop as altcoins rise. This is generally brought on by investors en masse rushing into rising altcoins. This process also takes place in reverse which wave effect will go forward and backward spanning a short time period.
If the crypto market at large expands or contracts you have a tendency to see Bitcoin and altcoins moving together in unison. This is not just as a result of the reality that Bitcoin is the reserve currency of crypto. It is also down to panic selling and buying across the whole crypto sector. You are able to witness similar trends on traditional stock markets. Where one companies not so good news could cause each of the stocks within the same sector to be subjected to sell offs. This is a matter of human psychology.
The cryptocurrency environment is an isolated ecosystem at this time over time and a lot of the price action the truth is is based on technical indicators (mathematical calculations based upon historical price, volume, or open interest information that aims to forecast financial market direction.) instead of fundamental analysis of things like gnrowh fees, speeds, fees and tech.
One more reason people flock to Bitcoin is it has had some of the most successful forks for any crypto currently. The prospect of getting free crypto is usually enticing.
It is important to remember that altcoins and Bitcoin usually do not always move together in perfect harmony. Instead they seem to follow along with a rotation. When altcoins are not in rotation they are sub-par investment in comparison to Bitcoin. If they are in rotation they provide greater gains. Timing the marketplace is an impossible task however it is worth keeping this trend under consideration.
Market manipulation could well play a part in the fact that cryptos and bitcoins seemingly move around in unison. Individuals or groups could make an effort to spoof all major coins on the major exchanges. Spoofing is a practice relating to the placement of fake orders to manipulate the prices.