It’s no secret that cryptocurrency values or prices are influenced by many factors and that they are highly volatile, but a very interesting factor is the influence of Bitcoin on every other cryptocurrency. Bitcoin has become the top dog in the crypto world and has retained that status for quite some time, more than many had expected.
It’s incredibly fascinating how the fall or rise of Bitcoin price can affect everything from Ethereum to . Bitcoin has become such a massive phenomenon, not only in the crypto world but in general, that it has an overarching effect over every other cryptocurrency. Why is this and how does it work? Let’s go over that in more detail.
Being the first means a lot
Bitcoin pioneered cryptocurrencies in general. There is no doubt that it popularized the concept and that the world of crypto would be far, far different if Bitcoin hadn’t happened. Because it is the first it is somewhat of a representative, when people think of crypto they think of Bitcoin.
All of these mean that people view Bitcoin as an example of crypto in general, which means that if BTC value drops, most coins lose a bit of value, but the inverse is also true since when BTC goes up, most others also follow suit.
It’s seen as a reserve currency
A lot of big-name investors view BTC as a reserve currency for crypto, just as gold is viewed as a reserve currency for fiat money. Because of this connection in the eyes of investors, there is an actual connection in price and popularity between Bitcoin and most other coins.
This view is unlikely to change for the foreseeable future and is one of the biggest reasons why Bitcoin has such a massive effect on the value and popularity of almost every other coin, it’s almost viewed as a grandfather or superior option to other cryptocurrencies.
Many copy it
There is an astonishing number of cryptocurrencies that are very similar to crypto, and a lot of which are pretty much clones with slight variations. This further reinforces the idea that BTC is the grandpa of all other cryptocurrencies which causes that connection in price between them.
Even those that don’t actually copy it gets compared to it as it’s seen as the gold standard for what a cryptocurrency should be and how it should function, and whenever comparisons are drawn, prices will also be compared and they will fluctuate.
BTC has the safest network
The sheer number of people participating in BTC mining shows a level of confidence and dedication that most other coins just don’t have. When you have millions of people mining your cryptocurrency it is bound to gain massive traction and influence over other cryptocurrencies as there are just more people involved than in any other mining operation.
Bitcoin has become trustworthy not only because of its good security in general but also because you know you can trust it if so many others do, which causes a snowball effect that just increases the rate at which it gains influence, thus leading to where we are now.
Conclusion
We hope that this text allows you to better understand why BTC has so much influence over all other coins. Not only is it the first, but it’s also the most trusted which has led people to view it as the paragon of cryptocurrencies.
It will probably be some time before people stop instantly thinking of Bitcoin whenever someone mentions cryptocurrencies as it has become quite ingrained in most people who aren’t deep into the crypto scene already, but who says that’s a bad thing? Either way, we hope that the knowledge of this influence and why it has occurred will help you better make financial decisions involving crypto investments.
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