Mainstream coins fell slightly, why did altcoins "collapse"? Here's the truth!

Many friends don't understand why altcoins fall precipitously when mainstream coins fall slightly. Today we'll talk about the reasons for this phenomenon.

1. Market sentiment

The value of altcoins is often based on speculation. When the price of mainstream coins falls, market sentiment becomes pessimistic, and investors tend to panic and sell altcoins. Once sentiment deteriorates, prices fall rapidly.

2. Insufficient liquidity

Compared with mainstream coins, many altcoins have smaller trading volumes and insufficient liquidity. When large funds flow in and out, price fluctuations can be very drastic. If mainstream coins fall slightly, altcoins may collapse quickly due to lack of buying.

3. Risk preference

Investors have a high risk preference for altcoins. The volatility of mainstream coins affects investors' confidence. Once confidence weakens, everyone will choose to sell higher-risk altcoins, causing their prices to fall sharply.

4. Capital chain

The funds of many altcoins often flow through mainstream coins. When mainstream coins fall, many investors will reduce the allocation of risky assets, resulting in a break in the capital chain of altcoins and a fall in prices.

5. Market reshuffle

The altcoin market itself is full of bubbles and uncertainties. When the market environment is not good, the value of many altcoins will be re-evaluated, and weaker coins will be eliminated, causing a sharp drop in prices.

The impact of mainstream coin fluctuations on altcoins cannot be underestimated. Multiple factors such as market sentiment, liquidity, and investor risk preferences are intertwined, making altcoins prone to a cliff-like decline when mainstream coins fall.