Why Do Altcoin Prices Often Go after Bitcoin – s Price? CryptoCurrency Facts
Last Updated – February 22, 2018
What is Up With Altcoin Prices Following Bitcoin’s Price?
It can seem like no matter what happens, the major altcoin prices go after Bitcoin’s price, even when it is illogical. Wij ask, “why?!”
UPDATE FEBRUARY 2018: The article below wasgoed written ter October 2017 when Bitcoin wasgoed outpacing alts after a market-wide correction. It wasgoed then updated ter December 2017 right before Bitcoin stagnated and alts boomed. Now I’m adding notes late February 2018, a few weeks after a market-wide correction and during a time when Bitcoin is outpacing alts. Keep that ter mind spil you read. Wij could be coming in a cycle like the one wij were te when I wrote this originally!
UPDATE DECEMBER 2017: I’ve learned overheen time that the fact that every major exchange offers BTC trading pairs (where you can trade BTC for alts rather than alts for fiat or USDT) is the key to understanding why alts go after BTC. Because BTC is the top coin being traded for other alts ter terms of market cap, volume, and general popularity, it is thus at the center of the crypto economy and has some gravity behind it (enough gravity to have an almost onveranderlijk relationship with altstem prices). I make that point below, but I want to stress it here spil I underestimated the importance of it ter the original article. The bottom line is that BTC can, for a myriad of reasons including the ones listed above, lift up alts, suppress alts, or depress alts. Add that to the fact that people have stops set te BTC and many bots trade ter BTC, and add to that the effects of everyone doing TA and watching the altstem/BTC charts for buy/sell signals, and you can see how switches te BTC’s price or even stagnation ter BTC’s price can have a cascade effect on the crypto economy. Consider thesis points spil you read the surplus of thesis insights and theories from October 19th, 2017 below. For a more latest article on historical altstem and bitcoin relationships see this article on the relation inbetween BTC and alts.
Demons ADVOCATE [this wasgoed written when BTC wasgoed on a run and alts were stagnating ter October 2017]: This pagina will argue that recently the only stir for investors wanting profit now has bot to buy BTC because other coins have at best poorly tracked BTC’s price making them sub-par investments compared to BTC at this time. However, one could argue BTC is now overbought, and Ether and Alts have very attractive price tags. Maybe Bitcoin Gold will end up being a joke, and everyone will leap to the top Alts? One needs to consider thesis sorts of things. This pagina presents ideas and discusses theories and insights, it does not suggest investment advice. Wij recommend a conservative strategy of dollar cost averaging te major coins, not putting all your eggs ter the Bitcoin basket based on any article you read including this one. The investing strategy you use is your call.
UPDATE DECEMBER 2017: Bitcoin Gold did just fine, make sure to be ter BTC for the forks (consider the perks of the Binance crypto exchange and wallets that let you control your private keys). BTC is still a clear winner for long-term dollar cost averaging. Other coins have out-performed short-term or at specific entry points, however, thus far, nothing has performed spil well spil BTC consistently overheen time.
NOTE: Below wij compare two major Alts (AKA Altcoins, coins that aren’t Bitcoin), Ether and Litecoin, to Bitcoin. Most other major alts go after the same trend. Some minor alts only do generally (but the correlation is less pronounced). The idea is to speculate and present theories to help you better understand cryptocurrency, it is not to opoffering you investment advice. UPDATE DECEMBER 2017: One reason it is less pronounced with other alts is that a few alts will be “pumped” (for valid and less-than-valid reasons on a given day), alts that are pumped tend to pauze the trend. They will usually resume following BTC within 24 – 48 hours after the volume increase dies down.
NOTE: There are some exceptional alts out there tech-wise, the Ethereum wise contract network for example. Even without the Ether token, Ethereum is “bad ass” spil they say. This article will concentrate on values of investing coins overheen the course of months (based on what has happened since the summer primarily). Obviously, ter the brief term, anything could toebijten, and long-term some alts might breakout and take the lead. Ter fact, I think this is very likely if crypto can hold against its upcoming challenges. Te other words, there is much to like about the major alts (top coins by market cap). With that disclaimer te mind, Bitcoin has bot the clear winner so far.
“The Bitcoin Standard”: Bitcoin is the Pack Leader, but That Only Explains so Much
The simplest reaction to the question of Bitcoin’s standing is, that “Bitcoin is king and queen, and the other coins are at best following it.”
It is hard to come up with a fundamental algorithm with which to price coins, so coin prices just go after Bitcoin spil a sort of gold standard, “the Bitcoin Standard.”
It is the number one coin, and thus it is the coin that determines the market price ter general.
Unluckily, tho’, that reaction suggests that all other coins are somewhat pointless spil anything other than short-term investments (compared to Bitcoin).
UPDATE FEBRUARY 2018: One key here is that cryptocurrencies tend to go after a rotation. When alts are not ter rotation, they are almost all sub-par compared to Bitcoin. When they are te rotation they tend to provide far fatter gains than Bitcoin if you can time them right. See May – June 2017 and December 2017 – January 2018. Te thesis times alts were te rotation and BTC stagnated. Outside of thesis times alts are very tricky to invest te and generally Bitcoin will outpace them due to the relationship inbetween Bitcoin and alts. Inwards thesis times, when Bitcoin stagnates, altcoins warmth up and fever up prompt. Timing the market is next to unlikely, but this is all worth keeping te mind.
They Don’t Just Go after Bitcoin However, They Go after it ter a Lackluster Way With Fewer Gains
If the above weren’t bad enough, it gets worse.
The major alts don’t go after BTC 100% of the time. Rather, they tend to exaggerate dips but not spikes.
That is, people tend to pull out of alts and go into BTC when BTC goes up, but all coins tend to go down ter unison. If you do the math on that, it is not good.
This has led to altcoins not regaining highs spil Bitcoin blew past its highs. The result is: when Bitcoin goes up the alts go after leisurely (after going down and then lagging behind), And when Bitcoin goes down, the alts seem to go after flawlessly or even exaggerate the decline.
After the early September crash, Litecoin and Ether picked up alongside Bitcoin, and all three regained some value. Then, Bitcoin sped off ahead of the pack (draining some value out of alts te the process). After that, Litecoin and Ether caught up a little (while Bitcoin Contant and some others either fell or picked up with Lite and Ether).
Then, Bitcoin went racing off for the moon and alts got left behind. Then alts picked up, but not back, and past highs like Bitcoin did. Then Bitcoin fell, and Alts fell with it kicking off October 17. Then, the same thing. Bitcoin got back to its high, but Litecoin and Ether have a ways to go to even see their pre-October 17 highs. Now, at mid-day Oct 20th, BTC is off past $6k, and Ether and Lite are ripping off.
If this pattern keeps up overheen time, alts will see puny gains and Bitcoin will gargle past alts to the extent where investing te any crypto other than Bitcoin becomes belachelijk (compared to Bitcoin).
Now with that said, it is very likely this won’t keep up. That at some point people will realize that other coins have unique value and shouldn’t go after BTC around like an index that tracks the price of BTC. However, that time is not yet upon us, and for now, the entire thing is all a little lackluster (unless you are 100% te BTC).
I am not attempting to be all doom and gloom here, ter fact, I’m bullish on alts longterm. I’m just pointing out the evident for the brief and mid-term. That is, if alts can’t embark standing on their own two pinnig te their trading price, they are going to become pointless spil a medium-term investment overheen time (which might make them a more useful currency than BTC but has some negative implications).
NOTE FROM OCTOBER 2017: Since August of 2017, the best you can do with any coin other than Bitcoin has bot to quickly hop te another coin for a quick profit if that coin lags when BTC rises. This would have worked wonders on October 12th for example if you bought Ether and Litecoin then and then sold again quickly. Sure, if you bought $225 Ether or $45 Litecoins ter early September you are blessed with the current prices. However, you are not spil glad spil if you bought a $3k Bitcoin and that is the point. Short-term trades have bot fine, and long-term holds have bot OK, but ter the interim, compared to BTC, alts are lacking.
UPDATE FEBRUARY 2018: Again, this all switched when BTC went out of rotation and alts went into rotation te December 2017. This happened very quickly and it wasgoed hard to catch if you weren’t looking for the pattern to reemerge. If you see Bitcoin stagnate and a few alts like XRP and XLM begin making onveranderlijk and strong gains, this is a hint that the rotation is coming again. It is ter thesis times that alts can pauze the trends noted on this pagina. Historically, it is indeed only te thesis times that alts pauze the trend. So albeit things could switch, this is vital to keep te mind.
Please consider, Alts Have Very Little Te Common With Bitcoin
The above would make sense if Ether were a Bitcoin copy, or if Litecoin didn’t have its own pros and cons, but coins like Ether, Litecoin, and say Ripple (just to add another interesting coin te here) are not doorslag copies of Bitcoin.
Litecoin aside, most other alts have nothing to do with Bitcoin. Thus it begs the question of this pagina, “then why the heck is their price so closely connected?”
They are all cryptos, and they are all listed on major exchanges. However, Coke and Pepsi are listed on all major exchanges, they are both companies based on sodas, but they don’t exactly mirror each other’s prices every day. Strafgevangenis would one expect them to.
UPDATE FEBRUARY 2018: Why would two coins have the same chart despite being so fundamentally different. One response is because cryptocurrency is an isolated ecosystem and a lotsbestemming of price activity is based on technical indicators and not fundamental analysis. A loterijlot of what you see is people leaping around from coin to coin attempting to grow their BTC stack (or sometimes ETH stack)… so they can either 1. have more BTC or ETH or Two. metselspecie out into fiat. Unluckily, while coders and crypto ventilatoren will speld white-papers to their fridge and talk about PoS vs PoW, traders and their bots are focused on price trends and profits (not fundamentals like transaction speeds, fees, or tech). Te terms of price trends and profits, from a purely technical perspective, BTC may spil well be widget A, XRP widget B, TRX widget C, etc.
Peak: Above I’m speaking spil a long-term investor te coins. Spil far spil the usefulness of technology, nothing can diminish a fine product like Ethereum. Likewise, Litecoin’s transaction speed is epic. Ripple and other alts have positive aspects too. But Bitcoin has bot the clear winner spil an investment. Bitcoin’s history compared to alts since cryptos rise te 2017, but especially since the summer, makes all other coins look like a less sound investment. If you bought the major coins high on August 31st, you lost money on almost everything except Bitcoin. That right there is the proof that Bitcoin has bot the only reasonable investment overheen the past few months.
NOTE: Bitcoin could be overbought, following the same logic above. However, it will almost certainly haul alts down with it ter a crash. Thus, it is almost a tranche point. It is like if Microsoft did poorly, so Apple crashed with it te volmaakt Unison, that would be unexpected. You would expect Apple to rise, or for Apple to take a slight succesnummer, not for it go after Microsoft. You would not expect that with any other asset. It is strange that it happens to crypto.
Speculative Theories on Why AltCoins Go after Bitcoins Price
I have a few theories:
- It could be that all prices are based on Bitcoin spil a gold standard because the market is youthfull and that the days of “follow the BTC price” are going to end soon.
- One could speculate that given thesis events, true democratic free market psychology ter a speculative market evidently behave very much like a herd. Way more than I would have expected.
- Perhaps, people are so jumpy about the bottom falling out of coins that any switch to BTC causes a scare when the price declines, but any spike causes everyone to rush to Bitcoin (especially when forks are on the horizon).
- Perhaps, someone(s) is meddling with the markets (for example by spoofing all major coins on major exchanges). This might possibly cause all the coins to fall ter line and would explain why they are often in-line, but not always. I’ve seen the markets being spoofed, but it is unclear how much of the movement is natural and how much is spoofing.
Perhaps there is a magic leprechaun who lives inwards the blockchain orchestrating everything. I’m not sure, which is why this pagina is speculation and theory and not hard fact.
Predictions on What Will Toebijten Next Based Purely on Past Events
What I am sure of tho’ is, if the pattern proceeds then the following will toebijten (the following is unspoiled speculation based on past events… which shouldn’t by all means directly affect future events aside from psychologically.
NOTE: This is a theory, it’s creative writing. I am not suggesting price projections on which you should base investments. Wij don’t do that on this webpagina. This is a webpagina about understanding cryptocurrency ter all respects. Not a webpagina for investing advice.
- BTC will most likely make some gains, it already recovered from Oct 17th.
- Alts will lagen for a minute.
- Alts will then shoot up around Oct 19th or 20th (assuming BTC doesn’t crash back before then).
- BTC will rise upwards to $6k via the week (reaching that point around the Bitcoin Gold fork on Oct 25th). NOTE: BTC popped up to $6k on Oct 20th. Thus, I may have under-estimated BTC. Let’s revise that to sub $7, with a specific projection of $6.Four (if BTC can hold $6k today).
- Alts will go after (but not to the extent that they regain September highs, or if they do regain them, they won’t go too far past them. Say $70 LTC and $260 Eth).
- Around $6k BTC will crash again to the low $4ks.
- LTC and ETH will be dragged down with BTC, but they will be much closer to their early September levels than BTC.
With that said, if all that occurs and LTC and ETH (and other major Alts) don’t exaggerate the crash, then it could eat into my theory and showcase that this lachwekkend trend will pauze soon. If they do klapper the above lows, with $45 LTC and $225 ETH while BTC goes to $4k or so, well then I’ll be personally tapering back on Alts and going intense ter BTC te my portfolio. Spil, while I think Ether is much cooler (because of the brainy Contract Ethereum network and lack of a crazy battle of the forks), my wallet chooses making money.
Now, of course, I am glad to be proven wrong. Trust mij, if wij pauze the pattern, I’ll be writing about it. I’ll be excited to see Ether, Litecoin, Ripple, etc. stand on their own two onaardig and see Bitcoin live its own life without telegraphed spikes and crashes.
Te the meantime. I’m going to invest conservatively at this point. And when I do invest, my portfolio will be strenuous te Bitcoin.
Meantime, you should just do whatever it is you are doing and not take my opinions and speculation spil investing advice.
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