Question about alt's price relative to Bitcoin

MicroGuy

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Quote from: lynn_402 on March 31, 2014, 07:06:36 PM

I don't understand the logic behind alt's price movement. When Bitcoin falls, they fall with it.

As has been explained, the price of altcoins is directly tied to BTC.

If you look at coinmarketcap.com, the USD prices shown are being calculated from the last ALT/BTC paring along with BTC/USD. Even if there was no trading volume on the alt, its USD price would move along with the BTC price. It takes time for investor capital to flow into the various coins after a large BTC price movement (lag).

The long-term trend seems to be that some of the capital originally earmarked for bitcoin is now making its way into the altcoins. This can be measured by subtracting the bitcoin market cap from the total market cap shown for all coins.

That number is growing and currently approaching two billion USD. At some point, the altcoin marketcap will exceed the bitcoin marketcap.

Bit_Happy

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Quote from: lynn_402 on March 31, 2014, 07:17:58 PM

Quote from: Bit_Happy on March 31, 2014, 07:12:24 PM

But I feel like it should be the opposite
Yes, It used to almost always be btc down and alt/btc would go up....BTC up and alt/btc would go down.

Then in Dec:
They both went into bubble mode together
BIG amazing bubble mode, and the market is still adjusting.

Thanks for your answer. Since the bubble seems to be quite over, do you think it will go back to behaving like it used to?
It seems logical to me that it would, but maybe the traders are too well-adjusted to the new paradigm.

The relationship was very consistent during all of last year (until Dec)
Do you think it will go back to behaving like it used to?
Cryptsy adding USD markets should be interesting; I'll be watching, but won't try to predict this one.

sonysasankan

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Quote from: lynn_402 on March 31, 2014, 07:17:58 PM

Quote from: Bit_Happy on March 31, 2014, 07:12:24 PM

But I feel like it should be the opposite
Yes, It used to almost always be btc down and alt/btc would go up....BTC up and alt/btc would go down.

Then in Dec:
They both went into bubble mode together
BIG amazing bubble mode, and the market is still adjusting.

Thanks for your answer. Since the bubble seems to be quite over, do you think it will go back to behaving like it used to?
It seems logical to me that it would, but maybe the traders are too well-adjusted to the new paradigm.

The logic of alts going up when BTC goes down make complete sense. However that could be the case only in a somewhat closed stable market. But in a market where people are still "reading about it" and the prices of BTC are almost wholly reliant on people getting into spending Fiat for BTC, any news that sounds like BTC is a "failure" and is on its way down is going to stop new people from coming in and the existing people from selling at whatever low price they can before it goes even lower. Now remember those people get into the ALT market only after they get their BTCs in hand because the Alts can only be bought with BTC and when they need to cash out the BTC, they need to sell their ALTS at whatever low prices they can get. Hence the ALT prices go down with BTC at this early age of Crypto.

Once its ALTS are tied to Fiat and if exchanges are not bombarded with Govt regulations to deal with fiat, ALTS will have a stability/volatility of its own with only a small tie to bitcoin's market.

lynn_402

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Quote from: Bit_Happy on March 31, 2014, 07:12:24 PM

But I feel like it should be the opposite
Yes, It used to almost always be btc down and alt/btc would go up....BTC up and alt/btc would go down.

Then in Dec:
They both went into bubble mode together
BIG amazing bubble mode, and the market is still adjusting.

Thanks for your answer. Since the bubble seems to be quite over, do you think it will go back to behaving like it used to?
It seems logical to me that it would, but maybe the traders are too well-adjusted to the new paradigm.

Bit_Happy

legendary

Activity: 2100

Merit: 1040

A Great Time to Start Something!

But I feel like it should be the opposite
Yes, It used to almost always be btc down and alt/btc would go up....BTC up and alt/btc would go down.

Then in Dec:
They both went into bubble mode together
BIG amazing bubble mode, and the market is still adjusting.

lynn_402

sr. member

Activity: 462

Merit: 253

I don't understand the logic behind alt's price movement. When Bitcoin falls, they fall with it.
But I feel like it should be the opposite. Like, when a hacker gets hold of a huge number of BTC, its value understandably crash, but alts also. Wouldn't the hacker want to buy the alts to diversify? So their value should go up, no?
Plus, of course, when BTC crashes, it takes less fiat to make their value go up. Many communities tied to altcoins don't keep most of their holdings in BTC, like that of Dogecoin, so BTC's dive should not affect them much.

Perhaps its simply because they both went into bubble mode together. Or perhaps there's no logic to it, just irrational market consensus Wink

Anyone care to enlighten me?

Topic: Question about alt's price relative to Bitcoin (Read 537 times)