Bitcoin is a leader in the market of cryptocurrencies and the first digital coin introduced more than 10 years ago. It is also known for frequent changes in prices. Those who invested in BTC on time could make a huge profit by selling it. The price started to rise in 2015 when it was over $300. After that, more people started to invest in this option, which affected the price to become even higher over time. The first big hype over this cryptocurrency was in 2017, which result in the first peak price of near $20,000.
However, a lot of investors started to sell it shortly after it reaches that value, and that caused a big fall in price. After that, BTC remains its value to be between $10,000 and $5,000. Moreover, the year 2023 and the pandemic is causing many financial issues in the whole world, which made a lot of people become interested in an alternative financial system, and Bitcoin is a leader in this field. By the end of 2023, it reached a price of over $25,000, and a new record in 2023, which is around $63,000. The current value is $45,000.
As you can see, the volatility is very high. That is the main reason why so many investors are interested in it in the first place. However, you need to understand that different factors could influence the changes in this market, such as supply and demand, popularity, official regulations, and more. There are different methods where you can make a profit as well. The most popular are mining, trading, and affiliate marketing. If you want to check out more about affiliate marketing methods, visit this site.
Moreover, besides BTC, there are over 3,000 other cryptocurrencies available today. That represents a great chance for investors to achieve higher flexibility because some other options might have great potential as well. Still, we can notice that a lot of them are following the changes of Bitcoin, and it is a trend that when BTC is gaining value, many other cryptocurrencies will get an increased price as well. Here are the main reasons why Altcoins are so dependent on BTC.
1. They Are Using the Same System
As we already mentioned, there are over 3,000 available coins and tokens on the market today. However, a lot of them are using the same blockchain system. Developers of other cryptocurrencies are using the same code that is applied in BTC. Even though a lot of them are trying to make it better, the popularity is much lower and investors are not sure about which option to choose that could overpass it in the future.
The best example is Litecoin, which has the same code, but it is focusing on faster transactions and a more flexible system. There are other nearly the same options, like Bitcoin Gold, Diamond, and Cash. An altcoin with the best chances to become independent from the influence of Bitcoin is Ethereum because it offers smart contracts and other benefits.
As a leader in this market, it is not a surprise that most people will choose to invest in that option. In most cases, traders are choosing other more affordable coins only as an alternative while they are mostly focused on the price changes related to BTC. If you check the price analyses, you will notice that most of the other coins and tokens gained value shortly after Bitcoin reached its peak price in May 2023.
Moreover, most investors see that as the most secure option. It is good to be more flexible since it can provide traders with a chance to make an even higher profit. However, the competition in this market is very high, and no one is sure whether some much more affordable solution can reach its potential and become a rival to Bitcoin.
There are some alternatives with great potential today, such as Cardano, Ethereum, Ripple, Monero, Dash, and more, and you could make a profit if you invested in them at the right moment. However, none of them is independent at the moment, and it seems that only ETH might have a chance to reach that.
3. Bitcoin is Used In Conversions
Another factor that is lowering the independence of altcoins is related to the system used in most online crypto exchanges. For example, if you invest in some altcoin and reach a point where selling can be profitable, you will need to convert it into Bitcoin, and then into fiat currency. Moreover, there are many exchanges where you cannot convert crypto into cash at all. You can only convert them from one model to another, with Bitcoin being the base of that system.
The main reason why it is so popular is the fact that it is the first blockchain currency introduced on the market. It offers security, anonymity, stability, and great potential. Some countries already have regulations where you can legally use it in transactions and pay taxes for the profit you made by trading. On the other side, the hype over BTC can always change, but chances are very low at the moment that investors will quickly change their activities and start investing in other types with the same volume.
Moreover, the fact is that most altcoins have the same features as Bitcoin. In that matter, the chances are low that they will manage to overgrow it without some innovations. The developers of other options need to work on improvements and offer new features if they want to become independent from it. Several options have the best chance for that, like Ethereum, Ripple, Stellar, and Monero.
The main advantage of ETH is related to smart contracts, which can bring many benefits by providing businesses with the ability to operate online without the need for physically signing any form of documents. On the other side, a lot of financial institutions are interested in Ripple and its blockchain. Stellar represents a great potential for businesses as well, while Monero offers the highest levels of security and anonymity.