Bitcoin Garden Forum
Cryptocurrencies => Crypto Discussion => Topic started by: yousufatik on October 17, 2018, 03:00:05 PM
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Why is it that the moment BTC starts to sway, the other coins follow suit. It would be hard for everyone to sell that much at the same time. It seems beyond just panic selling. They seemed to be directly linked. Inf-fact, BTC going down should increase and encourage altoins as they raise in value compared to BTC as it falls so why this uniform sell off? Something seems weird about that to me. Any real theories, or explanations?
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The foremost coin that got introduced was the bitcoins and the bitcoins really has a successful history on making advancement in the coins and the later on the coins which have been coming in the work is also due to bitcoins work process and if the bitcoins price seems to go down then whole the market comes into corrupt because one way or another every coin depends upon bitcoins and you will find fewer coins where the effect of bitcoin price is less affected over them but the altcoins are now under the eth so will say the same for that.
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I don't fully understand about this things but what I only know is because bitcoin is every altcoins / coins / tokens grandmother that they are following.
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It is really simple, it this state of the market, most people look for BTC is the main currency and therefore any positive effect on BTC would for sure effect other coins in the same way, so simply when BTC starting to go up people think this might be it and they usually jump in the altcoins they think will go up too, and when BTC start to go down people move from altcoins to USTD because they thinking this might be another downtrend.
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This is a really complex question and its going to take a lot to answer...
First of all, bitcoin's stability is the entire market..... imagine it as bitcoin being the trunk, ethereum is the larger branches.. and other altcoins are the leaves... Anytime the trunk isn't healthy the branches and leaves cannot flourish, and will quickly wilt or die.. but when bitcoin's trunk is really strong it creates a healthy cycle for the alts and branches to flourish. The analogy doesn't answer the question though but it does explain how it operates..but the real question is why? To me, the main reason this happens is not for fear or panic, but more for an opportunity. People think of cryptocurrency as long-term investments,, which the market doesn't honor. As you can see recently with alts pumping then pulling back as BTC needed some support, that simply no new money is coming into this space and is simply moving around. For example.. look at Tron for its Mainnet or Verge for its lolpornhub announcement.. no new money came into this space for those events, money frankly just moved from one place to another. Whales and smart money know when BTC is dropping to abandon alts not because they fear having them, but because they can capitalize on the capitulation of noobs and simply just pull their money away and wait for others that don't know whats going on to panic. But hodling isn't the answer either, since usually when alts pump alot of the gains are often lost rotating from one place simply to another. Imagine you have like a rotating face.. alts on one.. btc in another.. tether or USD in another. Alts are completely out of position 2 out of 3 times.. and not only will they not gain, theyll lose to people leaving them to cause a position trade. So the only way to really deal with this is to buy alts at the bottom of a BTC trend and sell them at the top of a BTC trend.. then either hold BTC to buy alts later or switch to tether and take advantage and double dip of staying in the right facing position.....
The next thing you're going to ask is why doesn't something like TRX/USDT disconnect.. the reason is it gets corrected by arbitrage algo bots. If there is a way to make money with an unnatural gap selling TRX to USDT and selling USDT into BTC back into TRX, the unnatural gap will be closed.. so even in this instance USDT doesn't make any sense.. on top of that USDT is just an altcoin not proven to be backed up by anything so you'd STILL have to back into BTC or ETHER to cash out back into cash on your preferred exchange.
To be fair, I know it sucks, but its just the way it is. The best way to deal with this is to do as everyone else does and move in and out of positions that will make you the most money... fundamentally I'm really bullish on a lot of alts, but if you're here to make money you have to play the smart game like everyone else. People position trade and do whatever makes the most money.. until it becomes a more regulated market and the speculation becomes more real use cases, I would expect it to get worse before it gets better.
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Bitcoin is the king in crypto space at least until now, bitcoin is considered a pioneer in cryptocurrency and so far the value refer to USD is the highest among all crypto space. It is also the volume and liquidity is the biggest so it is very reasonable if all alt coins are following bitcoin circumstances. I think it's because bitcoin is an icon among other coin types so everyone who will make a purchase on altcoin will follow the bitcoin price movement.
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You are all right but there is something that is main reason for that. All alts fallow bitcoin mainy couse economic reason. Its pure math. Let me explain
Now 90% of any altcoin volume is made in pair alt/btc and only 10% in fiat/alt.
When in 90% altcoin is traded by bitcoin than bitoin drop have to make price drop of altcoin. Why? Beacuse calculated price (btc value x altcoin value in bitcoins) is getting lower and lower beacuse btc value is getting lower. Big USD market is making it more independent from bitcoin move, becuse arbitrage bots buys cheep bitcoin, cheep alft from it and sells it on usd market. So if its big enought it can cover bitcoin drop making alt/btc price higher.
Thats why etherum is more independent. It has big fiat market with great volume. But still not high enough.
How it looks like now (90% of altcoin volume in btc pair)?
1-Bitcoin price drop.
2-calculated altcoin price $ drop
3-arbitrage bots buys altcoins for btc and sell on usd market making drop there (because its not big enought and loosing with alt/btc market) - without pushing alt/btc price higher beacuse usd market is too small to do that.
4-people seeing price drop are selling to btc and then fiat or hold bitcoin what decrise alt/btc value what even more push price lower and make more investors sell.
Thats why its so mechanical. Bitcoin drops and in the same second altcoin price drops. Bitcoin Price $ drop->Arbitrage bots->alt price $ drop->stoplos/trading bots leaves >alt/btc&$ price drop->investors sells->alt/btc&$ price drop-> next stoplos etc. thats how it looks. When it would be coues by investors decisions only ("ok ill sell becouse bitcoin - main currency- is droping") it wont be that fast i think.
Thats why when bitcoin drop 30% altcoins mostly drop 50%
It will also be possible when altcoins will have their reallife massured value. That will work like bigger usd market.