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Bitcoin Market Performance While Altcoins Fall and Why You Should Buy Bitcoin

Bitcoins and altcoins

Bitcoin (BTC) is a digital currency that operates free of any central control or the oversight of banks or governments, i.e., decentralized. It also has the potential to have cheaper transaction fees than other online payment methods. Hence, the reason investors buy bitcoin and other cryptocurrencies. 

It was one of the first cryptocurrencies to be discovered globally, and its philosophy and design served as a model for creating subsequent coins known as altcoins. Every cryptocurrency that isn’t Bitcoin is usually referred to as an altcoin, i.e., an alternative coin. 

Altcoins are cryptocurrency coins or tokens that are not Bitcoin, and there are currently about 12,000 altcoins in the world. Some of these altcoins include Ethereum (ETH), Cardano (ADA), Litecoin (LTC), Solana (SOL), Dogecoin (DOGE), etc. 

This article details the similarities and differences between bitcoins and altcoins, the interdependencies between bitcoin and altcoins in the cryptocurrency market, bitcoin’s recent market performance while altcoins fall, and why you should buy bitcoin.

Similarities and differences between bitcoins and altcoins 

Altcoins and bitcoins are quite similar, but they also differ in important ways. They were built based on Bitcoin’s success by tweaking the rules to cater to various users. Some cryptocurrencies, for example, construct blocks or validate transactions using a different consensus process. They may also set themselves apart from Bitcoin by offering new or enhanced features, such as smart contracts or minimal price volatility.

Ethereum, the second-largest cryptocurrency by market capitalization, pioneered the concept of “smart contracts.” These smart contracts are computer programs that only operate when certain criteria are satisfied. They use blockchain technology to execute agreements between two parties, allowing for new crypto applications.

Altcoins have enhanced functionality, transaction speed, and scale to accommodate the constantly growing demand. As the market for altcoins grows, many people worry if the original cryptocurrency’s dominance will be challenged by any currencies that follow it. 

The interdependencies between bitcoins and altcoins in the cryptocurrency market

Many currencies and tokens in the digital currency realm tend to move in similar patterns. When the value of bitcoin (BTC), the most valuable cryptocurrency by market capitalization, rises, the value of other digital tokens rises as well. When bitcoin falls in value, there is always a high probability that other cryptocurrencies will follow suit.

Bitcoin’s resiliency compared to altcoins might be explained by investors in the field, who consider bitcoin the most stable digital asset. Hence, they buy bitcoin more. Although critics might still point to its high volatility, it is still more established than altcoins. While the bear market is in force, investors concerned about newer, smaller cryptocurrencies may shift their cash from altcoins to bitcoin.

Bitcoin recent Market Performance While Altcoins Fall

Altcoin price fluctuations tend to follow Bitcoin’s path because they are often generated. This pattern has remained in recent weeks, as numerous cryptocurrencies have plummeted even deeper in what has already been a difficult year. However, as evidenced by most cryptocurrency global reports, something strange has been happening: Ethereum and other altcoins have been impacted worse than bitcoin overall.

Crypto markets, like stocks, have gone from risk-on to risk-off in recent times. Traders often overweight Bitcoin due to its reduced risk profile compared to other cryptocurrencies (altcoins). Altcoins also keep underperforming, indicating that some crypto bulls are still sitting on the sidelines.

Nevertheless, analysts believe that as cryptocurrency investing ecosystems mature and new markets emerge for these coins, price fluctuations for altcoins will become independent of Bitcoin’s trading signals.

Why you should buy bitcoin

If you are a first-time investor in cryptocurrencies or familiar with the cryptocurrency market, you are probably wondering why you should buy bitcoin, and there are multiple reasons why you should buy bitcoin. Some of which includes: 

  • Among cryptocurrencies, Bitcoin enjoyed a first-mover advantage. This provides it a sense of relative steadiness in the crypto market space.
  • Bitcoin and other cryptocurrencies have been peddled as a transformational technology that can change a variety of sectors.
  • It also offers potential hedging benefits, which many investors appreciate.
  • Bitcoin is built on a proof-of-work system guaranteed by the more than 18 million miners that participate in the blockchain, Bitcoin’s decentralized network.
  • Finally, Bitcoin cannot be produced or confiscated, and it is sometimes referred to as “digital gold” as a store of value.