Bitcoin and the other cryptocurrencies are better known as decentralized digital currencies but, they also serve as a reprisal of fiat currency. However, Bitcoin is the pioneer of the digital currency industry, hence it accounts for the largest market cap amongst other Altcoins.
The pace-setting of Bitcoin has carved out the crypto industry, affirming the global acceptance and adoption of cryptocurrencies. It is to this end that it has a more significant potential for influencing other cryptocurrencies and the crypto market in its entirety.
In this article, we will explain how Bitcoin price has a huge influence on other cryptocurrencies.
1. The Development Of Cryptocurrencies
Bitcoin influences the development of other cryptocurrencies in different ways. Many cryptocurrencies available in the market today are clones of Bitcoin. For instance, Litecoin, which was the first Altcoin to achieve mainstream adoption, thereby using a copy of Bitcoin’s code. The rationale behind founding Litecoin by its creators was to offer a faster and lighter version of Bitcoin. Other Bitcoin clones include Bitcoin Gold, Bitcoin Diamond, Bitcoin Cash, etc.
Also, Bitcoin has been the point of discourse on digital currencies and the crypto market. It pilots the digital currency revolution that innovators look up to when developing other cryptocurrencies. Many cryptocurrencies constantly try to become better versions of Bitcoin, albeit they only follow its lead. Therefore, Bitcoin price does not only influences the development of other cryptocurrencies but their applications too.
2. The Prices Of Digital Currencies
An outlook into the recent price performance of digital currencies is one way of determining the impact of Bitcoin price on other cryptocurrencies. Reports infer Bitcoin has overrun the other digital currencies in recent weeks, gaining the largest market share. At different times, it has broken its all-time-high records, becoming the world’s most popular and valuable digital currency today.
According to crypto experts, it is common for cryptocurrencies’ prices to follow a similar pattern. But platforms forms like Bitcoin Prime are also becoming popular with the growing number of more people trading these cryptocurrencies. With the Bitcoin price falling over the recent months after the previous price bubble, it has staggeringly emerged more robust than before after the drop in the price. This has also affected the prices of all cryptocurrencies to relatively have a surge in parallel to Bitcoin price.
Bitcoin has firmly held its value much better than any other crypto even as the prices of digital currencies have followed a similar trend. The resilience of Bitcoin over other coins is a function of its integrity as a more stable digital currency, and which in turn, potentially affects the prices of other coins.
3. The Cryptocurrency Market
Bitcoin is not only the world’s most valuable digital currency, it also commands about 50% of the entire crypto market. This repute has further stamped its authority and increased its popularity over other cryptocurrencies. According to some investors’ arguments, Bitcoin’s strong market position makes it appear like the reserve currency of the crypto market, like the US Dollar in global financial markets.
Bitcoin price and role as the leader of the crypto market have significant impacts on other cryptocurrencies. Its rapid surge in price has made other digital currencies look inferior with a less competitive advantage, especially the smaller and new ones. As a result, there is a propensity for many investors holding other cryptocurrencies to move their funds to Bitcoin. This would consequently disrupt the crypto market, depreciating the values of other digital currencies.
On the other hand, being the cryptocurrency market’s reserve currency, a dip in Bitcoin price could spell doom for several digital currencies and the entire crypto market. Its continuous growth also threatens other weaker and less-popular cryptocurrencies.
4. Bitcoin Has The Most Secured Network
Bitcoin operates on a proof-of-work mechanism that is ensured by more than 18 million miners participating in Bitcoin’s decentralized network, the blockchain. Due to this volume of participants, there is an effect of a high level of decentralization of the network, ensuring flawless security of the Bitcoin payments system.
Bitcoin is the primary and original cryptocurrency that started the crypto industry. This pioneering status has enabled it with a multi-billion userbase, which in turn, helped the geometric increase of its price with the most secured network in the ecosystem.