Cryptocurrency

Does the large amount of Altcoins will affect the price of Bitcoin?

Although Bitcoin (BTC) remains the criptomoneda market leader, the growth of Altcoins is something that cannot be avoided. In recent years, there have been many digital currencies alternatives to BTC. But what about the rise of the Altcoins will affect the price of Bitcoin? This is what you are going to try to answer in this article. Before you start, it is important to clarify the definition of this type of asset. The term Altcoin is the abbreviation of “alternative currency”, and refers to all those cryptocurrencies different to Bitcoin, such as for example Dash, Ripple, Dogecoin, etc .. In a first moment, it seems that the amount of Altcoins on the market have nothing to do with the price of Bitcoin. However, to give a more detailed look, you can find some relations. The first is given by applying the laws of supply and demand in the market cryptographic. While more chances of digital currencies exist, the price of BTC will tend to go down. This is because, if we adhere to this theory, to which now, thanks to the Altcoins, there are more options to choose from. Therefore, the “exclusivity” provided by the former scarcity of other crypto-assets is lost; and with it, high prices. However, many consider this response to be unsatisfactory. That is why we will proceed to the second theory: dominance.

The Altcoins and dominance of Bitcoin

The dominance of Bitcoin refers to how much we prefer the users on the other cryptocurrencies. In other words, what a domain has on the market. Although the dominance is not directly related to the price of BTC, yes that is related to Altcoins. The interesting thing about the dominance of Bitcoin is that it decreases when you are starting a AltSeason. This period can be defined as the season when the Altcoins reach their most positive points. For example, one of the latest and most profitable AltSeasons occurred at the end of 2017, as you can see in the graph below. Fall of dominance of Bitcoin which coincides with the boom of Altcoins. Then, it could be considered that, the arrival of a new AltSeason, taking into account the strong fall that has suffered Bitcoin, could lead to the Altcoins to a golden era ends for overshadow BTC. Some believe that a forthcoming fall in the dominance of Bitcoin, will also come with a drop in its price. And, not happy with that, ensure that this decline in the dominance should be the increase of the Altcoins on the market. However, nothing is proven. Still there are people who simply believe that the price of BTC and the amount of “cryptocurrencies alternatives” are not directly related. What do you think about these 3 theories? Do you think that is a matter of supply-demand, dominance or simply that no such relationship exists? Let us know your thoughts in the comments. The following two tabs change content below. I am a student of International Studies, interested in new technologies and their impact on the world. A true believer that tenacity is the foundation of success.

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