$BTC Did you guys ever wondered why altcoins decrease in value with bitcoin price going down? Let me tell you why:
There are many reasons why altcoins loose value more dramatically than Bitcoin when the market fluctuates but let me tell you 3 of them:
1. Risk Aversion: Bitcoin is the first and most established cryptocurrency, and it is often seen as a safer bet by investors. During periods of uncertainty and market downtrends, investors tend to buy Bitcoin, pulling their money out of altcoins which are perceived as riskier. This shift in investment cause altcoin prices to plummet.
2. FOMO (Fear Of Missing Out): When Bitcoin's price surges, some investors tempt to jump on the bandwagon, hoping to capture some profits. This leads them to selling their altcoin holdings to buy Bitcoin, further pressuring altcoin prices downward.
3. Bitcoin Dominance: The total market capitalization of Bitcoin compared to the entire crypto market means Bitcoin dominance. When Bitcoin dominance increases, it signifies that investors are putting more money into Bitcoin relative to altcoins. This leads to decrease in altcoin valuations.