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Wednesday, July 17, 2024
HomeNewsWhy Does Bitcoin Have Such A Big Influence On Other Cryptocurrencies?

Why Does Bitcoin Have Such A Big Influence On Other Cryptocurrencies?

Bitcoin and cryptocurrency took a long time to win investors’ trust around the globe. This also resulted in the inundation of numerous altcoins to join the financial revolution. However, time and again the experts spectate a common event after every bull run incidence- alternate cryptocurrency tends to follow Bitcoin trends. 

Why Does Bitcoin Have Such A Big Influence On Other Cryptocurrencies?

For instance- The October and November data for 2021 shows that Bitcoin rose beyond the $65,000 mark, taking the market by storm. Other cryptocurrencies followed the trend, owing to their increased demand. To see how bitcoin influences other cryptocurrencies by yourself, you can go to online apps like Bitcoin Profit.

Pre-eminent appearance

Bitcoin was the first currency to appear in the crypto markets, establishing itself as the most reliable and trusted of all. This boosted its appeal among the investors with time.

Code replication

At present, more than 12,000 altcoins have made their presence in the market. However, for most of them, the underlying code is similar to that of Bitcoin with better features like faster and lighter versions.

Dependable network

Bitcoin’s mechanism is based on proof-of-work. In other words, with more and more miners joining the established decentralized mining network of blockchain, the system improves in its efficiency. This makes way for a flawless security system where payments and transactions can be carried out smoothly.

Reserve currency

Behaving in parallel lines with USD stocks in the fiat currency markets, Bitcoin is considered to be the reserve currency. That is, Bitcoin is purchased as the first option to enter the cryptocurrency markets, and thereafter trading it for other currencies to earn huge profits.

Thus, Bitcoin is the reference standard for most of the trades. Even today, most of the fiat is either compared to Bitcoin prices, or to none at all. Thus, Bitcoin has emerged as the popular market pair for investors, especially beginners.

Naturally, as the Bitcoin prices fluctuate, so do the prices of its altcoins.

Capital dominance

The total cryptocurrency market is being capitalized by more than 50% by Bitcoin alone. This provides it with the essential dominance that makes it a driver at the crypto charts. Also, while making crypto purchases, one has to go via the Bitcoin route.

In other words, at most of the exchanges, for conversion of fiat to crypto, Bitcoin has to appear as the fore player. Similarly, while making an exit, Bitcoin has to be converted back to fiat. This mutual relationship that Bitcoin holds with the fiat does not allow it to vanish from the market scene entirely and makes it a dependable currency through and through.

Tradability

Comparing the trading volumes for all the cryptocurrencies, Bitcoin emerges as the master of all. Be it buying, selling, or exchanging the currency by the investors, traders, or even miners. Bitcoin is the threshold for all the comparisons done on various parameters- price values, trading volumes, and benefits.

Bitcoin is available across almost all the crypto exchanges and can be conveniently traded for any other currency or digital assets.

Market Proprietary

Bitcoin has established itself as a brand in the blockchain ecosystem. Most people around the world consider it synonymous with blockchain technology. Nevertheless, the fundamentals of blockchain are in line with those of Bitcoin. Hence, the two kicked off in sync with each other.

Valuation

Bitcoin has been announced to be limited to 21 million in supply. Once these are all mined, their periodic burning out and no fresh issue would lead to scarcity. Therefore, most of the Bitcoin supporters are willing to convert it into an asset to be traded over the blockchain to maintain their control over the funds. It also safeguards them against market collapse. Riding through the bear and bull markets, its value is going to persist over time, like any other asset- gold or precious metals.

It is, therefore, one of the top choices of most investors.

Conclusion

Bitcoin is going to stay over the blockchain for a very long time, being the reason behind the jumpstart of this financial invention. Its premiering launch has been a benefit it will enjoy for years to come. This also enabled it to win the massive userbase it has today, and the climbing prices over the charts, while ensuring a secured system of the network to build a trusted ecosystem. Speaking of market sentiment, alternate currencies fluctuate in tandem with Bitcoin prices.

Hernaldo Turrillo
Hernaldo Turrillo is a writer and author specialised in innovation, AI, DLT, SMEs, trading, investing and new trends in technology and business. He has been working for ztudium group since 2017. He is the editor of openbusinesscouncil.org, tradersdna.com, hedgethink.com, and writes regularly for intelligenthq.com, socialmediacouncil.eu. Hernaldo was born in Spain and finally settled in London, United Kingdom, after a few years of personal growth. Hernaldo finished his Journalism bachelor degree in the University of Seville, Spain, and began working as reporter in the newspaper, Europa Sur, writing about Politics and Society. He also worked as community manager and marketing advisor in Los Barrios, Spain. Innovation, technology, politics and economy are his main interests, with special focus on new trends and ethical projects. He enjoys finding himself getting lost in words, explaining what he understands from the world and helping others. Besides a journalist, he is also a thinker and proactive in digital transformation strategies. Knowledge and ideas have no limits.
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