Although cryptocurrencies are becoming increasingly popular because of the ideals of decentralization and potential outsized gains they offer, volatility is still high, and these assets have a higher risk of losing than conventional assets. In 2017, Bitcoin costs rose to $19,000, before falling to $3,000.1. After that, Bitcoin rose again through 2023, hitting new highs at $60,000 before falling to $30,000 in 2023.
Bitcoin is, however, the leader of the digital currency market and currently holds the largest market capitalization. It is the pioneer of the cryptocurrency industry and has ensured that cryptocurrencies are accepted and adopted worldwide. It has the potential to have a more significant impact on other cryptocurrencies as well as the whole market. Check out this article for more information on the influence of bitcoin on other cryptocurrencies.
Top Reasons Why Bitcoin Can Influence the Whole Crypto Market
You may have noticed that when Bitcoin’s price falls, other cryptocurrency prices (such as altcoins) also fall. We expect altcoins will rise in price when bitcoin prices rise. Why is this possible? Why is Bitcoin so important? It would be absurd to imagine that the Nasdaq would crash if all Microsoft stocks were included.
1. Bitcoin Was First The First Player In Crypto World
Bitcoin has been a pioneer in the new industry for many years. This has allowed Bitcoin to become a trusted store of value and has helped it grow in popularity to an incredible extent. No matter what, Bitcoin is the coin that brought cryptocurrencies to the mainstream. Bitcoin’s simple concept was so popular that it reached a price of $50k+.
It opened the door to a whole new industry. Today, nearly everyone involved in crypto has at least one bitcoin. It is worth noting that Bitcoin is the only cryptocurrency whose creator is still unknown.
2. Many Altcoins Can Be Clones Of Bitcoin
We saw an explosion of Bitcoin clones in the years following its release as a result of its growing popularity and value. Litecoin was the first altcoin that saw mainstream adoption. It utilizes a replica of the Bitcoin code to be lighter and more efficient than the original.
There are numerous other clones, including Bitcoin Cash, Bitcoin Gold, and Bitcoin Diamond. Although each person tries to be a better Bitcoin user, the majority of them follow Bitcoin’s lead.
3. Bitcoin Is Known For Its Secure Network
Bitcoin’sBitcoin’s proof-of-work mechanism is the basis of Bitcoin. It is guaranteed by 18 million miners who participate in Bitcoin’s decentralized network called the blockchain. This large number of participants creates a high degree of decentralization in the network, which ensures excellent protection for the Bitcoin payments method.
4. It Is A Reserve Currency That Many Investors Consider To Be A Good Option For Cryptos
Due to its leading position, Bitcoin is often considered the reserve currency for the crypto market by investors, much like the USD on the international stock markets. Because of their respective countries’ compliance and regulatory requirements, most cryptocurrency trading platforms don’t allow fiat trading. Many investors invest initially in Bitcoin to trade for altcoins and then try to profit.
Pure crypto vendors don’t compare altcoins prices to fiat money. They compare their value to BTC because they care about the market pair. Therefore, it is understandable that market prices will fall when the Bitcoin market sensation drops.
5. Digital Currencies Prices
One way to determine bitcoin’s effect on other cryptocurrencies is by looking at their current price interpretation. According to reports, bitcoin has gained the largest market share and has outperformed all additional digital money over the past weeks. It has broken several records, making it the most valuable and popular digital currency worldwide today.
Experts declare that cryptocurrency rates are pretty typical to follow the same practice. Because many people trade cryptocurrencies like Bitcoin Prime have been growing in popularity. However, bitcoin’s price has declined in the months since the bubble. The price drop has made bitcoin more resilient than ever. Although all cryptocurrencies have experienced a relative rise in prices, bitcoin is the most popular.
Although digital currencies prices have been following a similar trend over time, bitcoin has maintained its worth better than any other cryptocurrency. Investors view bitcoin as a more steady digital currency, which is why it has a greater resilience than other coins. This means that the bitcoin price surge could lead to more losses for other coins.
6. Government Responses
Authorized responses to cryptocurrency have been mixed at best from the central banks and monetary institutions. Although many associations support them, most central banks remain cautious due to the market’s extreme volatility. There are also concerns about capital controls and tax evasion.
- United States Federal Reserve: The chairman of U.S. Federal Jerome Powell states that technical concerns will remain and that governance and risk management are crucial to ensure cryptocurrencies can become mainstream.
- European Central Bank: The former Vice President of the European Central Bank, Vitor Constancio, says Bitcoin is a “tulip”, referring to the Dutch 17-century bubble. Many other governors have also expressed similar doubts.
- People’sPeople’s Bank of China: This organization believes that circumstances are “ripe”; the central bank needs total control and is breaking the cryptocurrency ecosystems in China.
- Bank of Japan: this organization does not see a market in cryptocurrencies.
- Bank of England: Mark Carney, the former Governor of Bank of England, called cryptocurrency a “revolution in finance” and made the central bank one of few government adherents of this technology.
Bitcoin was the first cryptocurrency to spur the industry. Its spearhead rank has allowed it to attract multi-billion users, which makes the increased price in the market and provides a secure network in the crypto world.
When talking about the market sentiment, Bitcoin is often the last word. Investors and traders who are experienced in trading always verify Bitcoin before selling or buying altcoin positions. We hope that our article helped to shed some glare on this cryptocurrency sensation.