In the digital currency space, it's common for many coins and tokens to move in similar patterns. When bitcoin (BTC), the largest cryptocurrency by market cap, goes up, other digital tokens tend to increase in value as well. When BTC declines, it's likely that other players in the space will drop at the same time.
In recent weeks, as many cryptocurrencies have fallen even further in what has already been a tough year so far, this pattern has held. However, as a report by Zycrypto.com indicates, something interesting has been happening: Ethereum and other altcoins have been hit harder than bitcoin, overall. Why is it that altcoins are suffering more significant losses than the top digital currency?
Bitcoin ETF News
The report indicates that bitcoin has commanded more than 50% of the total cryptocurrency market cap in recent weeks. One important turning point for the crypto space was the announcement that the U.S. Securities and Exchange Commission (SEC) would delay any announcement of a decision regarding the approval of a cryptocurrency exchange-traded fund (ETF) until the end of September. While this announcement, which took place earlier in August, spelled trouble for all digital currencies, it seems to have had a longer-lasting and more significant impact on Ethereum and other altcoins.
While investors sold off digital currencies following the SEC announcement, bitcoin was able to hold its value better than other coins. Ethereum dipped to its lowest price in about a year, falling below $300.
Bitcoin Stability?
One explanation for the resilience of bitcoin relative to other cryptocurrencies is that investors in the space may view BTC as the most stable digital token at the moment. Detractors can still point to high levels of volatility in BTC, but it is nonetheless more established than some other tokens. Investors feeling skittish about newer, smaller cryptocurrencies could reasonably be expected to transfer their funds from altcoins to bitcoin while the bear market is in effect.
Geopolitical Concerns
Another potential factor in bitcoin's relative strength compared to other tokens could have to do with the geopolitical environment. Ongoing civil unrest and increasing economic struggles in Turkey have prompted a significant influx of investor money into the cryptocurrency space. The report suggests that a large proportion of these assets has gone straight to bitcoin. The Turkish lira has fallen considerably, and many people in Turkey have turned to BTC as a more stable store of value than their local fiat currency.
The situation in Turkey could be a glimpse into what might happen on a larger, global scale during the next significant financial crisis. For many cryptocurrency enthusiasts (as well as digital token skeptics), the true test of bitcoin and other coins will be when there is another financial meltdown. Will investors flock to cryptocurrencies as a group? Will they turn their attention predominantly on a single player, like BTC? Or will cryptocurrencies collapse along with mainstream economic institutions?
Regardless of the combination of reasons for bitcoin's relative success in recent weeks, the key term here is indeed "relative." Bitcoin is still struggling, as it has throughout much of the year. While it remains on top of the digital currency landscape, that space is suffering from significant losses compared with where it was at the beginning of the year.
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FAQs
Constantly diluting supply with token unlocks, selling pressure from venture funds, lack of fresh inflows to crypto and seasonal trends all contributed to the brutal drawdown in altcoin prices.
Why Bitcoin is better than altcoins? ›
Volatility: Bitcoin exhibits lower volatility compared to other digital assets due to its prominence and greater market liquidity. Altcoins are often more volatile, experiencing sharp price fluctuations influenced by news, technological advancements, and shifts in investor sentiment.
Why is Bitcoin worth so much more than other cryptocurrencies? ›
Scarcity: As the supply of unrewarded coins diminishes, demand increases. There will only ever be 21 million bitcoins in existence. Divisibility: Bitcoin is much more divisible than fiat currencies.
Will altcoins outperform Bitcoin? ›
As the crypto market gears up for the next bull run, a handful of altcoins are ready to surge past Bitcoin. These promising tokens are generating buzz and catching the eye of investors. Discover which cryptocurrencies are poised for explosive growth and could potentially outperform the market leader in the near future.
Why are altcoins crashing? ›
The key market factors include political uncertainty, geopolitical tensions, economic data, and ETF performance.
Which altcoins will skyrocket? ›
5 Altcoins to Buy Before They Skyrocket 100x in the Coming Bullish Rally
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In the digital currency space, it's common for many coins and tokens to move in similar patterns. When bitcoin (BTC), the largest cryptocurrency by market cap, goes up, other digital tokens tend to increase in value as well. When BTC declines, it's likely that other players in the space will drop at the same time.
Why all altcoins follow Bitcoin? ›
What Altcoins Follow Bitcoin? Many altcoin prices follow Bitcoin's because it is the cryptocurrency that sets the standard and pace. Litecoin, ether, dogecoin, and many others have trends that mimic Bitcoin.
Which coin is better than Bitcoin? ›
Litecoin (LTC) Litecoin is designed to be 'silver to bitcoin's gold', according to its founder Charlie Lee. And just as the supply of silver outstrips the supply of gold, Litecoin's maximum supply of 84 million coins is four times greater than bitcoin's.
Is it possible for Bitcoin to go to zero? ›
It is possible, but unlikely, for Bitcoin to go to zero. Like any other asset or investment, the value of Bitcoin is subject to market forces. It can be affected by various factors, including supply and demand, investor sentiment, and regulatory actions.
How Many People Own 1 Bitcoin? How Many People Own 1 Bitcoin? Summary: As of 2024, there are about 420 million cryptocurrency users globally. Of these, approximately 1.5 million individuals possess more than 1 Bitcoin, which is just 0.36% of all cryptocurrency users.
What's driving Bitcoin up? ›
The sharp rise in the funding rate and an increase in open interest suggest an increase in speculative trading or an increase in overall market confidence. It could also reflect a shift in trader expectations about future price movements, possibly anticipating high volatility or strong upward price movements.
Is it better to invest in Bitcoin or altcoins? ›
Many investors look to altcoin for higher risk-reward assets while considering BTC and ETH as blue-chip cryptocurrencies. Given the high risk of altcoins, investors should consider restricting them to a mini portion of their portfolio. The reward opportunity is higher.
Which altcoins do not follow Bitcoin? ›
Besides Bitcoin, there are several other cryptocurrencies that use blockchains. Some popular examples include Ethereum, Ripple (XRP), Litecoin, and Cardano. Each of these cryptocurrencies operates on its own blockchain network with unique features and functionalities.
Which altcoins are most promising? ›
The most popular and valuable altcoins include ethereum, BNB and XRP. There are thousands of altcoins in the global cryptocurrency market, but most hold little value and have limited liquidity. Many altcoins are based on the bitcoin blockchain and have the same basic functions as bitcoin.
Why have all cryptocurrencies dropped? ›
The cryptocurrency market saw its biggest three-day sell-off in recent years due to growing fears of a possible US recession and rising geopolitical concerns. Bitcoin dropped 13% from its Sunday closing price to $51,560, heading for its biggest one-day fall since November 2022 and its lowest level since February.
Will altcoins recover in 2024? ›
NFT giant Solana (SOL) has sported downtrends for the last 30 days, while Ripple (XRP) isn't faring much better despite placing its case with the SEC on hold. Traders, however, are still hoping for a bull run in 2024, perhaps something to mirror last year's Q4.
Why are altcoins not rising? ›
Altcoins market cap against Ethereum has been on a multi-year decline. Ethereum has outperformed several altcoins despite wider market assumptions that they provide leveraged exposure to its price.
Will the crypto market recover? ›
Additionally, the performance of major cryptocurrencies like Bitcoin and Ethereum suggests a resilient market poised for growth. With Bitcoin trading above $63,000 and Ethereum at $3,422.17, the market shows signs of recovery and potential for further gains.
