Why do altcoins fall most of the time when Bitcoin falls?
In terms of liquidity and trading volume, mainstream currencies such as Bitcoin and Ethereum have much higher market liquidity and trading volume than altcoins. When the prices of Bitcoin and Ethereum fall, trading volume and liquidity will decrease suddenly, which will also affect the trading activities of altcoins, leading to price declines.
Many speculators use leverage to trade cryptocurrencies. When the market falls, leveraged positions may be forced to close, which will further exacerbate the market's downward trend and affect all cryptocurrencies including altcoins.
The prices of altcoins tend to be correlated with the prices of Bitcoin and Ethereum. This correlation may be due to factors such as market dynamics, investor behavior, or underlying technology. Therefore, when Bitcoin and Ethereum fall, altcoins tend to follow suit.
During market declines, some investors may choose to exit the market and reduce their risk exposure. This often results in funds being withdrawn from altcoins and transferred to more stable or mainstream assets such as Bitcoin and Ethereum, further driving altcoin prices down.
In the cryptocurrency market, holding cryptocurrencies seems to be a psychological game. Whoever is bolder may get the meat, but they are also aware that the risks of altcoins seem to be higher, so when the market is unstable, they may give priority to selling these high-risk assets to protect the remaining value of their portfolios. Risk aversion is even more important in the cryptocurrency market.
The current market poses a challenge to infrastructure projects funded during the bear market. Although these projects are launching tokens, there are not a large number of regular buyers at high prices. At present, the altcoin market is characterized by insufficient liquidity and a large number of tokens to be unlocked, which puts pressure on prices. Whether it can be sold or not, whether there is anyone to take over, all need to be tested by the market.
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