Bitcoin came into existence in 2009 almost a decade ago starting at a value of zero. Being an open-source project many other altcoins used the Bitcoin blockchain to create their own tokens. In 2017, Bitcoin touched its peak price of near $20k and cryptocurrencies became the hottest trend which leads to hundreds of new cryptocurrencies getting listed on the crypto trade market.
Although the total number of listed altcoins is over 15,00 according to coin market cap, that’s just the tip of the iceberg as hundreds of new altcoins are flooding the market and almost the same amount see the light of the crypto graveyard.
In these 10 years of cryptocurrency existence, Bitcoin has maintained its status quo in all aspects be it the token price, the trade market ranking or the total market capitalization. Thus, the trends in the markets are heavily governed by the Bitcoin.
If the Bitcoin prices are gaining an upward movement, the whole market follows the suit and the trends are quite similar when the prices are on a downward spree.
Take the recent crypto winter for perspective, while many Bitcoin bulls predicted the prices of Bitcoin to increase double fold from its 2017 peak price, but the bears were dominant for the longest period that the crypto markets have witnessed since its inception and as a result, the price of Bitcoin was cut down by 80%.
The slide in Bitcoin value was rubbed onto the other altcoins and the major cryptocurrencies including the top 10 altcoins lost almost a similar percentage of their valuation, while some even perishing to the bearish trends. Thus, its quite evident that the Bitcoin holds the key to the trade market trends in crypto space.
Why Bitcoin Holds the Key to Crypto Trade Market Trends?
Cryptocurrency as technology is considerably new thus the majority of the population are either never heard of it or even those who have does not understand how it works. But, Bitcoin has become more than just a decentralized currency, it has become a phenomenon and more of a “cult’ which is followed by many even when they don’t know what it does, just because they have heard that it peaked a price near $20k.
This is probably one of the biggest reasons for Bitcoin holding the trade market trend baton. Another factor that makes Bitcoin the driver of trends in the crypto space is the price volatility, which is fuelled by the sentiments and PR buzz.
A piece of good news can see the prices move up while a negative press can tumble the prices. In absence of any definite parameter to measure the valuation, most of the sentiments are attached to the Bitcoin, making it a driving force for the market trends.
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Crypto-Trade Market is Quite Disorganized
Another reason that makes bitcoin the driving force of trends in the crypto market is the disorganization. There are hundreds of exchanges out there which list the same altcoins on every other exchange. This creates quite a confusion and uncertainty in valuation. The price of the same altcoin may vary from one exchange to another.
Compare it to the traditional stock exchanges where the stocks of one firm are listed on a single exchange and most of the information are publically available making it quite easy to cross-verify.
This is one of the most prominent reasons that make Bitcoin a driving the market sentiments. If the prices of Bitcoin starts to peak other investors follow the suit to dump their holdings to start buying Bitcoin and vice versa creating a “Mexican Wave’ kind of scenario.
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Bitcoin is among the Only Entity Not considered as a Security
Cryptocurrency is based on the Distributed Ledger Technology and the concept of decentralization, which was the main purpose of Satoshi Nakamoto. However, the price peak of Bitcoin made people greedy and most of the altcoins that ventured into the crypto space after that were heavily centralized. This is the reason only Bitcoin and Etheruem are considered to be independent entities while the rest falls under the security bracket.
This makes Bitcoin one of the most trusted entities and makes it what it is today. This also makes the Bitcoin a driving force in determining the sentiment of the market.
Crypto-Trade markets have gained a lot of stability during the last crypto winter cutting the price volatility by a significant margin. Now, the flag bearers of the decentralized space must look to expand its portfolio not just in term of mass adoption but also to actually make decentralization the primary criteria for any altcoins to be considered crypto, otherwise, the market sentiments would still be driven by Bitcoin.
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