Bitcoin came to light in 2009 and gave rise to a digital market that gathered millions of users, grew its capital manifold, and finally resulted in the cryptocurrency market we witness today. The crypto market gathered investors from everywhere across the globe and is all set for the final revolution. Bitcoin, from the time of its launch till now, has been crowned the king of digital currency. Every other cryptocurrency that is developed is collectively called altcoins.
Altcoins mean nothing but alternate coins; around 3000 altcoins currently exist in the crypto market. Generally, it is observed that the altcoin price follows bitcoin. However, despite the massive difference between these two, the cost of altcoins, when tracked, follows Bitcoin through thick and thin. Why is this so?
Bitcoin’s influence on altcoins
The primary reason altcoins stick with the exact price pattern of Bitcoin is that the altcoins are predominantly measured in bitcoins. Several potent digital assets in the market could compete with Bitcoin. Altcoins are known to serve multiple intents, and it is easy to buy apecoin or other altcoins from popular exchanges. This dominance undoubtedly makes Bitcoin the most potent digital asset and has a lot of influence and control. Bitcoin’s domination over the entire crypto market is remarkable because even if around 3000 opponents bind the whole market capital, bitcoin alone rules over half of the total crypto market.
Keeping aside the dominance, several other factors account for the price influence of altcoins concerning Bitcoins. First, most altcoins cannot be bought directly using fiat currency; instead, the users buy Bitcoins first and later exchange them with the altcoins of their choice. Therefore, if a user who owns altcoins decides to leave the market, they most probably would sell their possessions for Bitcoins. Later, this bitcoin is converted to fiat currencies.
Bitcoin was the first ever cryptocurrency
As mentioned earlier, bitcoin is the first cryptocurrency introduced to the crypto market. With the highly advanced features and excellent user base, cryptocurrency paved the way for an entire industry. Today, every cryptocurrency user owns at least a few bitcoins. The reason for its huge success is that the concept behind this coin is straightforward, and the learning curve is not too steep compared to the altcoins that exist in the crypto market today.
Most altcoins are simply Bitcoin clones.
Unlike other digital assets, bitcoin does not have a complex network. Because of the same, over the past few years, an increasingly high amount of Bitcoin clones have been introduced into the market. Even though nothing could beat the efficiency of the Bitcoin network, these coins managed to survive.
The primary objective behind the development of clones is to bring out a better version of Bitcoin. Many clones were introduced to the market to become a faster, more energy efficient, and lighter version. Some managed to succeed while others did not.
Bitcoins possess the most exemplary security system.
The blockchain backs bitcoins and the entire network is based on the Pow [proof of work] mechanism. This mechanism has been entrusted by over 18 million miners actively participating in the bitcoin blockchain network. As the volume of miners increased, it resulted in high-level decentralization, which promised sound security for bitcoin’s payment system.
Traders consider Bitcoin as the reserve currency
Because of its popularity, most traders consider Bitcoin a digital market reserve currency, just like the US dollars in the global stock markets. It has been observed that most traders never compare the bitcoin price with fiat currency instead; they compare it with the Bitcoin price.
Bitcoins is the first ever cryptocurrency responsible for developing the entire cryptocurrency industry. This fact alone gives Bitcoin the upper hand. In addition, the asset is trusted and invested by millions worldwide. All these reasons, along with the multi-million user base, resulted in developing the safest network in the ecosystem.
When it comes to market sentiments, it is essential to understand the Bitcoin price movements because, most often, the final word is influenced by Bitcoin. Therefore, trading experts and investors never fail to check Bitcoin before buying or selling Altcoin positions. I hope this article has given you better insights into the altcoin price influence phenomenon.