When Bitcoin rises, altcoins do not rise; when Bitcoin falls, altcoins fall sharply.
An unusual phenomenon is occurring in the current bull market: although the price of Bitcoin is rising, many altcoins are experiencing declines, with some altcoins plummeting by around 40%. The reasons for this situation can be analyzed from the following aspects:
1. Change in market structure
The dominance of Bitcoin has increased: In this bull market, Bitcoin's market capitalization share has significantly risen, leading to increased attention and investment enthusiasm for Bitcoin, causing more funds to flow into Bitcoin rather than altcoins. This increased dominance suppresses the performance of altcoins.
2. Investor sentiment:
Risk aversion sentiment: As market uncertainty increases, many investors choose to concentrate their funds on relatively safer Bitcoin, becoming more cautious about investing in altcoins. This sentiment leads to a decrease in demand for altcoins, triggering price declines.
3. The impact of leveraged trading:
High leverage risk: Many investors use high leverage to trade altcoins. When the market experiences a correction, the leverage effect exacerbates the decline of altcoins, leading to significant price volatility.
4. Market adjustment:
Technical correction: After a period of rising prices, altcoins may undergo a technical correction. Many altcoins performed strongly at the beginning of the bull market, and it is normal for prices to retreat as the market adjusts.
5. Liquidity issues:
Insufficient liquidity: The liquidity of altcoins is relatively low, with inadequate trading volume from market participants, leading to increased price volatility. In the case of Bitcoin's rise, liquidity issues in altcoins may cause their prices to fail to follow Bitcoin's upward trend and instead decline.
6. Market sentiment reversal
Panic sentiment: The panic sentiment in the market has intensified. Investors choose to cut losses after seeing the prices of altcoins decline, further exacerbating the downward trend. The reversal of this situation puts pressure on the prices of altcoins.
Summary
The phenomenon of Bitcoin rising while altcoins fall in the current bull market reflects the impact of multiple factors, including changes in market structure, shifts in investor sentiment, and technical adjustments. Despite Bitcoin's strong performance, altcoins are under pressure from various aspects, leading to significant price declines.
I recommend that everyone try to invest in mainstream coins or some mainstream chains.
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