Why Are Altcoins Falling Faster Than Bitcoin?

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Why Are Altcoins Falling Faster Than Bitcoin?

Many currencies and tokens in the digital currency realm move in predictable ways. When the value of bitcoin (BTC), the biggest cryptocurrency by market cap, rises, the value of other digital tokens rises as well. When BTC falls, it is probable that other participants in the industry will follow suit.

This trend has remained in recent weeks, as numerous cryptocurrencies have dropped even deeper in what has already been a difficult year. However, as Zycrypto.com reports, something strange has occurred: Ethereum and other altcoins have been struck worse than bitcoin overall. Why are cryptocurrencies incurring more losses than the dominant digital currency?

Bitcoin ETF News

According to the survey, bitcoin has recently captured more than half of the whole cryptocurrency market valuation. The declaration by the US Securities and Exchange Commission (SEC) that it would defer any decision on the establishment of a cryptocurrency exchange-traded fund (ETF) until the end of September was a significant turning point for the crypto market. While this statement earlier in August was bad news for all digital currencies, it seems to have had a longer-lasting and more severe effect on Ethereum and other altcoins.

While speculators sold down digital currencies in the aftermath of the SEC statement, bitcoin held its value better than other currency. Ethereum fell below $300 for the first time in over a year.

Bitcoin Stability?

One reason for bitcoin’s endurance in comparison to other cryptocurrencies is that investors in the field may see BTC as the most reliable digital asset at the time. Detractors may still refer to BTC’s extreme volatility, but it is still more established than some other coins. While the bear market is in force, investors who are wary of newer, smaller cryptocurrencies may shift their cash from altcoins to bitcoin.

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Geopolitical Concerns

Another element that might influence bitcoin’s relative strength in comparison to other coins is the geopolitical climate. The ongoing social upheaval and growing economic difficulties in Turkey have resulted in a large infusion of investor capital into the bitcoin industry. According to the research, a major chunk of these assets have gone directly to bitcoin. The Turkish lira has plummeted, and many Turks have turned to Bitcoin as a more reliable store of value than their native fiat money.

The scenario in Turkey might be a foreshadowing of what will happen on a wider, global scale during the next major financial crisis. The ultimate test of bitcoin and other currencies, according to many cryptocurrency enthusiasts (as well as digital token doubters), will be when there is another financial catastrophe. Will a large number of investors rush to cryptocurrencies? Will they concentrate their efforts primarily on a single player, such as BTC? Or will cryptocurrencies go the way of traditional financial institutions?

Whatever the mix of causes for bitcoin’s recent relative success, the crucial word here is “relative.” Bitcoin is still in trouble, as it has been for most of the year. While it remains at the top of the digital currency scene, it has seen huge losses since the beginning of the year.

Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) is very dangerous and speculative, and this article is not a suggestion by Investopedia or the writer to do so. Because every person’s circumstance is different, a knowledgeable specialist should always be contacted before making any financial choices. Investopedia makes no guarantees or warranties about the accuracy or timeliness of the information provided on this site. The author owns bitcoin and ripple as of the day this post was published.

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