Many people who watch the altcoin market also watch the Bitcoin market. There is a solid reason for this, because it is said that the Bitcoin market price and the Altcoin market price are linked. Why?
What is Bitcoin?
Bitcoin is a type of virtual currency and is currently the crypto asset with the highest market capitalization in the world. Bitcoin has the following features:
The biggest feature of Bitcoin is that it uses a technology called blockchain for transactions. Blockchain acts as a ledger that keeps track of Bitcoin transactions. A block consists of a set of agreed-upon transaction records and information to connect the blocks together. It is called a blockchain because blocks are distributed and managed as a single chain.
The number of Bitcoins issued is limited to 21 million. Since it is a specification and is structured in the program, it is not possible to issue more than this number. Most crypto assets have a final issue limit.
Half-life once every 4 years
Bitcoin halves once every four years. Halving reduces the speed at which new Bitcoins are put into circulation by half. There is such an approach because there is a limit on the number of supply as a mechanism to prevent oversupply of currency and inflation.
What is Altcoin?
Altcoins are all cryptocurrencies other than Bitcoin. This is exactly the case with Ethereum, Litecoin, and Ripple. Of course, other unnamed coins are also considered coins. Altcoin prices are linked to Bitcoin prices.
Why are Bitcoin and Altcoin Linked?
There is a question as to why bitcoin and altcoin are interlocked. This is said to be associated with the following reasons.
The price of altcoins is determined by the price of Bitcoin. This is because most of the altcoins are traded on the basis of Bitcoin. Since Bitcoin is considered the key currency, even famous coins such as Ethereum and Ripple are linked by Bitcoin. All over the world, virtual currency exchanges are trading altcoins denominated in Bitcoin.
AI automated trading
AI automated trading is having an impact. Automatic trading is basically a system that fails, but beginners tend to use it, and it has a big impact on the market. Automatic trading is often set to buy when bitcoin goes up and sell when it goes down, so the market is also pulled. Therefore, the correlation is very strong.
Bitcoin is the base currency
Bitcoin is the key currency in the virtual currency market. As long as the key currency remains Bitcoin, altcoins will continue to be influenced by Bitcoin. Therefore, the price movement is always linked.
Open an account
In order to actually start investing, you must first open an account. MEXC allows you to open an account for free, so you can easily open an account. The article below explains how to open an account, so please refer to it.