Do altcoins follow ETH more than BTC?
Before today's cryptocurrency dip, BTC was continuing to return to a price near 42K, a near full recovery to the price from merely a few days ago.
Despite this, almost all alts (altcoins, i.e., cryptocurrency alternatives to BTC) have barely recovered 50% of their own respective prices from this same time period just a few days ago. So why the drastic difference? My theory: ETH
To illuminate this, I have mapped out the market caps of BTC, ETH, and every other cryptocurrency in the chart above. As one can see, the total market caps of ETH and the market caps of all other non-BTC/ETH cryptocurrencies (i.e., the remaining alts) have been at almost precisely the same rates of change since 2018 much more closely than to BTC. This looks to have continued during ETH's latest run in 2021. However, "all good uptrends must come to a retracement", which looks to have now started for ETH possibly resulting in similar drops for all other alts with it in my opinion.
The reasoning for such a phenomenon has often been explained multiple different ways, such as
- "all crypto, not just ETH, drops at more dramatic news such as the latest China ban"
- "precipitous drops in BTC price result in people taking out larger amounts until things subside"
- "whale manipulation causes all prices to drop to enable themselves to buy at smaller prices"
or the reasoning I generally prefer:
- "whereas BTC is a store of value, most other alts either use, are built upon, or support ETH and/or its smart contracts for usages such as utility tokens, DeFi, etc. and hence it has a larger effect on the market as a whole"
Regardless the reasoning, it looks like the trend of ETH might help anyone who watches a non-BTC cryptocurrency trend. However, despite what seems to me to be a stronger correlation, ETH has always followed the trend for BTC rather closely (as can clearly be seen in the chart). Hence, one should still keep in mind BTC for any dramatics that could influence ETH either positively or negatively, particularly as to which direction trends might head in the longer-term.
Also, in case you are curious how I calculated the market caps for BTC, ETH, and all other cryptocurrencies, check out my previous post for details:
And as always, this is not meant as any type of financial advice, but is just my opinion for an interesting trend. But please like or comment if you agree or have any thoughts.
Despite this, almost all alts (altcoins, i.e., cryptocurrency alternatives to BTC) have barely recovered 50% of their own respective prices from this same time period just a few days ago. So why the drastic difference? My theory: ETH
To illuminate this, I have mapped out the market caps of BTC, ETH, and every other cryptocurrency in the chart above. As one can see, the total market caps of ETH and the market caps of all other non-BTC/ETH cryptocurrencies (i.e., the remaining alts) have been at almost precisely the same rates of change since 2018 much more closely than to BTC. This looks to have continued during ETH's latest run in 2021. However, "all good uptrends must come to a retracement", which looks to have now started for ETH possibly resulting in similar drops for all other alts with it in my opinion.
The reasoning for such a phenomenon has often been explained multiple different ways, such as
- "all crypto, not just ETH, drops at more dramatic news such as the latest China ban"
- "precipitous drops in BTC price result in people taking out larger amounts until things subside"
- "whale manipulation causes all prices to drop to enable themselves to buy at smaller prices"
or the reasoning I generally prefer:
- "whereas BTC is a store of value, most other alts either use, are built upon, or support ETH and/or its smart contracts for usages such as utility tokens, DeFi, etc. and hence it has a larger effect on the market as a whole"
Regardless the reasoning, it looks like the trend of ETH might help anyone who watches a non-BTC cryptocurrency trend. However, despite what seems to me to be a stronger correlation, ETH has always followed the trend for BTC rather closely (as can clearly be seen in the chart). Hence, one should still keep in mind BTC for any dramatics that could influence ETH either positively or negatively, particularly as to which direction trends might head in the longer-term.
Also, in case you are curious how I calculated the market caps for BTC, ETH, and all other cryptocurrencies, check out my previous post for details:
And as always, this is not meant as any type of financial advice, but is just my opinion for an interesting trend. But please like or comment if you agree or have any thoughts.
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