As an investor, it’s critical to understand that, while cryptocurrencies differ in many ways, they are nonetheless highly interdependent. The market is so closely-knit that when one currency starts to move up or down either, you can anticipate other currencies to follow suit.
This can be linked to increased consumer trust in the market as a whole, but it’s also because many alts closely follow Bitcoin’s journey.
There are many cryptocurrencies in the market now, but the truth is their price depends on Bitcoin. Let’s know why?
Bitcoin’s dominance in the past
In terms of market domination, BTC has been mostly above 50% since the debut of an additional ten cryptocurrencies. Until November 2014, BTC had a market share of more than 90%. After the launch of XRP, dominance began to decline, reaching 78 percent during the first altcoins season, when XRP had a 13 percent domination.
BTC’s dominance crept back towards 90% in early 2016, until ETH was listed on many exchanges, taking 13% of the market cap and causing BTC’s dominance to plummet below the 70s before crawling back up.
BTC’s supremacy began to wane in mid-2017 when Ether became increasingly popular and appeared to have the potential to dethrone BTC.
In June 2017, BTC had a 38 percent market share, while ETH had 31 percent.
Although Bitcoin dominance is an intriguing number to examine, it is essential to remember that it does not reflect its actual value (primarily because of forked and pre-mined coins, which impact the total market cap very unnaturally). It’s also worth mentioning that market capitalization does not imply a cash inflow. It’s basically a calculation based on the current market price and circulating supply.
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Bitcoin was the first cryptocurrency
Bitcoin has carried a lot of weight as the pioneer in this new business over the years. This has, however, allowed the original cryptocurrency to establish itself as a reliable store of value, boosting its appeal to dizzying heights.
Whatever anyone says, Bitcoin was the coin that made cryptocurrencies famous. Bitcoin’s relatively simple premise appealed to the general population, propelling its price to the coveted $50k+ levels we see today.
It cleared the path for a new sector, and practically everyone active in cryptocurrency now owns at least a little amount of bitcoin. It’s worth noting that Bitcoin is the only cryptocurrency whose founder has remained totally unidentified to this day.
Many altcoins are nothing more than Bitcoin clones
The world observed a profusion of Bitcoin clones in the years after its release due to its increasing popularity and value.
For example, Litecoin, the first cryptocurrency to gain widespread acceptance, is based on a clone of the Bitcoin code with the intention of becoming a lighter, faster version of the original. There are a slew of other clones, including Bitcoin Gold, Bitcoin Diamond, Bitcoin Cash, and hundreds more.
While everyone strives to be a better version of Bitcoin, the majority of the time, they simply follow it.
Bitcoin’s dominance of the cryptocurrency market capitalization
Because altcoin prices are often measured in Bitcoin, it’s no surprise that they follow Bitcoin. Despite having over 3,000 competitors, the original crypto-asset still controls more than half of the total cryptocurrency market capitalization. Bitcoin has a lot of power and control over the crypto industry because of its dominance.
Furthermore, most altcoins cannot be acquired directly with fiat currencies; instead, most customers first purchase Bitcoin and then trade it for their preferred altcoin. As a result, if someone holding altcoins wants to exit the crypto space entirely, they’ll most likely sell their holdings for Bitcoin and then convert Bitcoin back to fiat currency. Because of this symbiotic relationship, the value of many altcoins is frequently linked to Bitcoin.
As a result, the value of an altcoin is frequently measured in terms of Bitcoin’s price. Therefore the price of altcoins may fall if Bitcoin’s price falls, and vice versa if Bitcoin’s price rises.
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Markets are required for any currency to function correctly. Cryptocurrency markets that are healthy allow miners to cover their costs. Bitcoin can also be converted into fiat currency by merchants. Serious crypto traders can also place large orders. When compared to the trading volume of all other cryptocurrencies, Bitcoin has the highest volume.
Bitcoins are used to calculate the worth of other virtual currencies. As a result, Bitcoin has become something of a reserve currency in the crypto markets. As a result, most exchanges require new users to buy Bitcoin before they may buy other digital currencies.
Bitcoin Is A Recognized Brand
It goes without saying that Bitcoin is a well-known brand. Although some people are unaware of the existence of this virtual currency, they are aware of its presence. Many investors throughout the world are interested in blockchain technology.
Many individuals desire to learn more about this technology and see what it has to offer. Exploring blockchain without first understanding Bitcoin first is nearly impossible.
Storage of Value
Bitcoin supporters want to establish it as a digital asset for holding value. This is due to the restricted supply of the currency. As a result, it is comparable to gold. Bitcoin owners have complete control over their funds, which acts as a safeguard against the banking system’s collapse.
Bitcoin, like gold and other precious metals, has bear and bull markets. People, on the other hand, have demonstrated that Bitcoin is a solid value storing option. While other digital currencies may have lucrative trading markets, their value diminishes with time. As a result, crypto traders and investors may prefer to invest in Bitcoin over other cryptocurrencies.
Bitcoin is the founding father and financial invention that established the framework for today’s cryptocurrency world, and it will not be soon forgotten.
Even if there are thousands of cryptocurrencies on the market today, the first one to launch still has the upper hand.