The importance and pioneering spirit of Bitcoin makes it a guide for the trends of several alternative currencies, but are there any exceptions to this rule?
Those who keep up to date on the cryptocurrency market occasionally see the price of alternative coins, the so-called Altcoins (Alternative coins) following the variations of Bitcoin, indicating a correlation between the values.
But are these changes always proportional? If today Bitcoin appreciated, for example, 50%, would all Altcoins follow this percentage?
What are Altcoins?
Altcoins have been emerging after the launch of Bitcoin, and they take this name precisely because they were created as alternatives to the coin minted by Satoshi Nakamoto. While Bitcoin was created to solve problems such as double spending and financial decentralization, Altcoins are developed with different proposals, to meet whatever need their creators have a solution for.
After all, what is the relationship between Bitcoin and Altcoins?
Currently, Bitcoin represents to the crypto market what the dollar represents to fiat currencies. In other words: just as the movements of the dollar serve as the basis for the appreciation or devaluation of various currencies around the world, what happens with Bitcoin impacts most alternative cryptocurrencies.
Because they are relatively recent, cryptocurrencies are still a very volatile technology, and if that volatility is true for Bitcoin, which pioneered the digital world and has been establishing itself for years as a reliable source of decentralized finance, it certainly applies to projects as well. who came later.
This is a trend that we can observe even among some of the most well-known and solid altcoins on the market. Ethereum, for example, has been following the recent successive lows of Bitcoin.
Investors who come from the traditional financial market take a risk when betting on Altcoins, and when they observe that these currencies are in low moments, the tendency is for them to change their investments to safer means, such as fixed income and government bonds, to preserve capital.
However, Altcoins do not always follow the same paths as Bitcoin, whether in relation to highs or lows, and even when they do, the size of the movement is not always proportional. One of the most emblematic recent cases is that of AXS, the main token of the game Axie Infinity: while Bitcoin appreciated 59.36% in 2021, the crypto asset of the game had an impressive growth of 17.239% in the same period.
The fact is: over time, technologies evolve a lot, and their applications in projects too, making several projects appreciate, regardless of the performance of Bitcoin. In other words, yes, there is a strong relationship between Bitcoin and Altcoins, but it is not absolute and does not always occur in the same proportion!
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