Bitcoin is by far the most secure cryptocurrency today. The latest rankings place it on top of thousands of altcoins that have emerged after its debut in 2009. What’s also more interesting is that any movement in bitcoin has a corresponding effect on other virtual currencies.
This fact is validated by recent reports, as when bitcoin’s price goes up, the same thing happens to other coins. But when the worst-case scenario occurred, it was revealed that altcoins were falling faster than bitcoin. Investors should settle upon this pattern because it has direct implications for the cryptocurrency they choose.
Investors should go beyond the usual buying and selling of assets if they want to take the matter seriously. There are underlying reasons explaining why altcoins are more prone to wild downswings than their counterpart. Being aware of what triggers the vulnerability could serve as a baseline for current and future decisions.
For instance, when a certain factor is identified to be causing higher price volatility, an investor could monitor such an indicator and decide accordingly. Bitcoin may offer more security and stability, but it does not mean that altcoins are downright unprofitable. Below are some facts for you to understand why such outcomes happen.
What’s the Real Score in the Crypto Market?
Unlike other financial markets, cryptocurrency has unique patterns. More often, when bitcoin moves in a certain direction, altcoins would normally follow. That means that the top digital currency is a driving force in the overall network, affecting its counterparts in pricing. This has been observed many times, and even today, it continues to be that way.
The latest reports reveal that many cryptocurrencies have experienced higher volatility in the past periods, and the same pattern existed. But what remains interesting among experts is that altcoins have been hit harder as the market goes through tough stages. Certain factors were identified, as briefly discussed below, to pinpoint the cause of why altcoins are suffering from the market’s instability.
The adoption of cryptocurrency in different parts of the world faces various issues. Among the most prevalent is the geopolitical environment that directly affects the currency relative strength compared to other tokens. For instance, the civil unrest and economic struggles of a country can prompt the significant influx of investors’ assets into the market. Investors are seeking a safe haven against the threat of devaluation, and bitcoin has always been serving this purpose. As a consequence, bitcoin’s market share expands, which is one factor affecting its value.
Such a situation has already been observed in countries like Turkey. Many speculators are wondering about the possibility that might exist when the same thing happens in other cryptocurrency landscapes. For some people, that could be the real test of bitcoin and altcoins on whether they could stand financial meltdown and guarantee better protection than fiat currencies.
In bitcoin’s case, the relative success in the past could be explained in a much broader context. The top cryptocurrency has encountered wild price swings, but it stood the struggle and came out stable. But compared with altcoins, some industry observers have seen some differences.
Many investors probably wonder how bitcoin remains more resilient than other cryptocurrencies. One major reason is the fact that it has established a good market in the industry. Thus more people view it as the most stable digital token at the moment. But it’s also true that the currency may still experience a high level of volatility. However, as seen over the years, bitcoin proved more secure than altcoins. For this reason, many people would consider investing in bitcoin and the like rather than go for startup crypto projects.
A recent report indicates that bitcoin has commanded over 50% of the total crypto market cap in recent periods. Experts believe that the turning point can be attributed to major events, such as, for instance, the announcement that the U.S. Securities and Exchange Commission (SEC) would delay any decision on the approval of a cryptocurrency exchange-traded fund (ETF). When this news came out in 2020, it impacted all digital currencies and also affected the stability of the network.
Cryptocurrency experiences price swings because the market is highly volatile. You have to acknowledge this fact before investing in this digital asset. The risks can be more manageable if you are aware of what triggers sudden changes in protocols and pricing. Bitcoin may have proved more secure and stable, but it does not mean that altcoins are not a good investment. When you explore your choices, you might discover many opportunities as this online platform offers – Bitcoin Revolution.