0

Bitcoin has grown significantly in the last few days. From what I can see on Binance, price of the majority of altcoins has dropped significantly relative to bitcoin at the same time. I've been thinking that bitcoin rise should make another cryptocurrencies even more valuable but looks like there is an inverse correlation.

So why are the altcoins dropping related to bitcoin so heavily? Can anybody explain what's causing such relationship? Thank you.

  • 2
    What do you get when you sell an average altcoin? Do you get dollars? No. You get bitcoins. When people sell Altcoins, they get bitcoins => offer decreases => price rises. – ndsvw Feb 28 '18 at 10:12
  • You could also add that many altcoins propose advantages over Bitcoin. So when good Bitcoin gets good news it effectively gains against these coins. – Josh Feb 28 '18 at 16:35
  • @Alpha I really like your answer, that explained it to me pretty well. If I think that bitcoin price will rise, what, in your opinion, would be the best for me - sell all altcoins for BTC or continue holding altcoins assuming they will gain even more overtime? I'm just curious to know your point of view. – Ivan Yurchenko Feb 28 '18 at 21:04
  • @Ivan Yurchenko, I know/learn about the technology of bitcoin but I don't want to tell you much about the market because I'm not an expert. But if you think that the BTC price could rise more than others (and increse its dominance ~ 40% at the moment) in the next weeks, changing only 50% of your altcoins to BTC is maybe not a bad solution. So you would still profit if an altcoin price explodes. – ndsvw Feb 28 '18 at 23:08
  • @Alpha Got it, thank you. I never thought about such opposite correlation, there were times where altcoins were rising alongside with bitcoin, but I think in that case it was due to a whale who carried the price. Do you mind adding me on Telegram to exchange ideas? As you can see, I'm far from being expert as well but I have researched into the market and had some profitable trades (i.e. I doubled my NANO investment and sold on .0016). Though currently I'm in negative in terms of BTC due to its recent rise (I hold alts only). If you would be interested you're welcome: t.me/lazermax – Ivan Yurchenko Mar 1 '18 at 7:22
1

There are a few reasons, some examples (not limited to the below of course):

People will buy coins before forks, in the hope of claiming both coins and getting a "dividend" even if they don't believe the fork coin has value, they can simply sell at any price to get "free" money. Possibly these people will then sell the coin they bought for bitcoin anyway, benefiting from the rise as other people bought in, and the sale of the fork.

Another possibility, if you're a BTC maximalist (and a "Whale"), is driving alt coins up, after the coin has pumped, you can sell back for BTC, increasing your BTC holdings. Buying randomcoin and a few cents, driving the price up, or waiting for an announcement etc, will mean, again, you can safely move back to BTC increasing your holdings. There's some circumstantial evidence of this happening.

People realising "gains" from alts, moving to BTC, people tell you to "diversify", but that's not always the best long term strategy, especially if your altcoins have experienced a gain, moving profits back to BTC (in lieu of FIAT) makes sense.

Dont forget the power of FOMO (Fear Of Missing Out), people will buy anything if the price is rising!

0

The one ane only reason is that everybody opting for BTC rather than altcoins. And this may create a bullrun for BTC but will also be the reason for the greatest dump ever. The pro traders will get the benefits out of it.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.