Altcoins are still dependent on bitcoin
ETH token plummeted after halving
Bitcoin price jump had a positive effect on LTC
International consortium of news organizations developing transparency standards.
The main cryptocurrency bitcoin sets the general trend in the market and influences all other coins. How halving Bitcoin halving cuts the number of new coins created and earned by miners in half. This happens approximately every four years and … More Bitcoin has influenced altcoins and what will happen to them next, BeInCrypto asked the experts of the EXMO cryptocurrency exchange.
Why the Alts Follow BTC Price Movements
Altcoins must prove their worth
Since bitcoin is the main cryptocurrency, its development sets the vector for altcoins. The correlation coefficient of prices for bitcoin and other cryptocurrencies shows the graph below.
Bitcoin’s dominance index in the market today is 67.85%. It’s worth noting that the value has grown from 30% since 2018. With the rise in the price of bitcoin (which happened in 2017), investors begin to actively pour money into other cryptocurrencies, which can reduce the level of dominance of the main asset … Before the halving of 2020, this figure was at 69-70%, but soon dropped to 67%.
Despite the fact that with the rise in the price of bitcoin, interest in other cryptocurrencies also increases, this factor alone is not enough to reduce their dependence on the main cryptocurrency. A high correlation indicates that they themselves are of less value to investors. The decrease in the dominance of bitcoin is more likely associated with significant changes in the development of altcoins themselves, the conclusion of new partnerships that increase their value in the cryptocurrency market. If, after the second halving, the alt season was largely facilitated by the belief of users in the promising and huge possibilities of cryptocurrency technologies, then today significant breakthroughs in the projects themselves are needed. But it should be noted that the growth of altcoins began a year after the second halving, so if this scenario repeats, many cryptocurrencies still have time to prove their worth..
On the eve of the second halving in 2016, the price of Litecoin increased from $ 4.15 to almost $ 9, but after a reduction in the reward, it returned to its previous level. Soon, the active growth of the token began and by the end of 2017 the cost was $ 53, which is largely due to the jump in the price of bitcoin. Prior to the 2020 halving, Litecoin traded in the $ 47 range. On May 11, the price dropped to $ 40. As of May 20, the cost of one coin is $ 45.53
The BTC / LTC correlation coefficient is 0.87 / 1. Thus, if the price of the main cryptocurrency increases, Litecoin will also increase with a high probability..
During the second halving in 2016, the value of the ETH coin did not change significantly. At the same time, by the end of 2017, the price for one coin increased 27 times. Since the BTC / ETH correlation coefficient is 0.89 / 1, this is also due to the sharp rise in Bitcoin in December 2017.
If before the halving of 2020, the cost of one coin increased to $ 211, then it soon began to decline to $ 199. Despite this, as of May 19, 2020, the price is $ 212.87. In the future, the value of Ethereum is expected to rise while the value of the main cryptocurrency increases.
As for Bitcoin Cash, the event contributed to the increased security of the fork. A month before the halving of the main cryptocurrency, Bitcoin Cash also halved the reward for the mined block. Many were forced to switch to Bitcoin mining due to the loss of profitability. The situation changed with the halving on May 11, 2020. Shortly after the event, there was a double jump in the Bitcoin Cash hash rate, which helped to restore mining capacity to its previous level. The Bitcoin Cash price has also changed. Before the halving, Bitcoin saw a decline in value from $ 267 to $ 233. As of May 20, the price is $ 246.87 per coin. Since the correlation coefficient of BTC / BCH is 0.85 / 1, growth of this cryptocurrency is also expected soon..
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