How Altcoins Can Reduce Bitcoin’s Grip on the Crypto Markets

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The year 2022 has wit­nessed the largest bear­ish ral­ly in the cryp­to mar­kets. Bit­coin, for exam­ple, has shed up to 50 per­cent of its val­ue since Jan­u­ary 1, 2022, when it was also at the sum­mit of a bull run. Alt­coins have also felt the heat that has hit oth­er trad­able com­modi­ties in the stock market. 

A 20 per­cent loss in cryp­to val­ue is sig­nif­i­cant in PrimeXBT’s cfd trad­ing ter­mi­nal, though such behav­ior is a high­light of a volatile mar­ket. Such a mar­ket is a clear sign of a shift away from cryp­to to oth­er safer assets. Sev­er­al less-known coins have resist­ed the mar­ket forces push­ing down the prices of many assets. Their resis­tance and a poten­tial future ral­ly are down to the infra­struc­ture they support. 

The Correlation Between Bitcoin and Altcoins

About a decade ago, when cryp­to was try­ing to break out from the con­fines of anonymi­ty, Bit­coin had a mar­ket hold of about 95 per­cent on the broad­er cryp­to mar­ket. How­ev­er, the num­ber dropped to about 34 per­cent in 2017 when the mar­kets ral­lied after a break­out of oth­er cryp­tocur­ren­cies such as ETH. Bit­coin picked again in 2021, dri­ving its dom­i­nance to about 71 per­cent of the cryp­to markets.

Bull mar­kets have been the turn­ing points that have shak­en the dom­i­nance of Bit­coin at the top, accord­ing to his­tor­i­cal data in PrimeXBT. The recent bull mar­ket in Q3 2021 saw Bit­coin shed some of its grip on the cryp­to mar­ket, stand­ing at about 40 per­cent. The rea­son for this is new investors seek­ing to take posi­tions in the cheap­er coins ear­ly, antic­i­pat­ing a mas­sive ral­ly that will make the small coins worth a lot more. 

The cur­rent bear mar­ket has pushed peo­ple out of alt­coins. While some have moved away from cryp­tocur­ren­cies com­plete­ly, most have secured their posi­tions with Bit­coin because it is the best bet to regain its val­ue soon when mar­kets become calmer. The exo­dus to Bit­coin at the time of the finan­cial cri­sis means the small­er coins shed more val­ue than Bit­coin itself.

How Some Altcoins Performed In 2022

Bit­coin shed over 50 per­cent of its worth from its Novem­ber 2021 highs of about $65K. The fig­ure is not much dif­fer­ent from what oth­er cryp­tocur­ren­cies have endured with­in the year.

Ethereum has lost about 69 per­cent from its his­toric high. Car­dano has out­per­formed Bit­coin in terms of val­ue lost to reach a low of about 79 per­cent since the last cryp­to bull mar­ket that hap­pened at the end of 2021. Solana and Doge­coin have man­aged loss­es of over 80 per­cent each in 2022 from their peak val­ues back in Novem­ber 2021. 

The pat­terns high­light that the move­ment of Bit­coin, whether bull­ish or bear­ish, push­es up or low­ers the base val­ue of oth­er cryp­to assets.

How Altcoins can Reduce Bitcoin’s Grip on the Markets

At the time of an eco­nom­ic melt­down, the assets with a strong sup­port are the ones that sur­vive the hit thrown at them by exter­nal fac­tors such as ris­ing inter­est rates and increas­ing ten­sion in East­ern Europe. While Ethereum has wit­nessed a mas­sive tank that has shed near­ly half its mar­ket val­ue, the blockchain tech­nol­o­gy it fuels is still num­ber one in the Defi space. 

The large hold alt­coins have on Dapps and new­er assets such as NFT could be help­ful to nav­i­gate the tur­bu­lent times when investors are in a sell­ing mood. Peo­ple hop­ing to host their apps in the blockchain must still have ETH or any oth­er cryp­to that runs a blockchain to accom­plish their projects. The sup­port cryp­tocur­ren­cies give util­i­ty appli­ca­tions might one day crush the hold Bit­coin has on the cryp­to industry.

Bottom Line

Bit­coin is the Wal­mart or Ama­zon of cryp­to and has a pow­er­ful hold on the direc­tion of the cryp­tocur­ren­cy mar­ket. Bear mar­kets in Bit­coin, accord­ing to PrimeXBT’s price ter­mi­nal, have often hit oth­er coins hard­er. There is also a cor­re­la­tion between poor runs in the mar­ket and the strong­hold bit­coin has on the cryp­to mar­ket. How­ev­er, with the base tech­nolo­gies that sup­port alt­coins grow­ing every day, the hold might end.

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