Bitcoin and the other cryptocurrencies are decentralized digital currencies but, they also serve the same purposes as paper money.
However, bitcoin is the pioneer of the digital currency industry, which now accounts for the largest market cap. It has paved the way for the crypto industry and ensured the global acceptance and adoption of cryptocurrencies. That is why it has a more significant potential for influencing the other cryptocurrencies and the entire market. This article explains how bitcoin affects other cryptocurrencies.
Digital currencies’ prices
Looking at the recent price performance of digital currencies is one way of determining bitcoin’s impact on other cryptocurrencies. Reports show bitcoin has overrun the other digital currencies in recent weeks, gaining the largest market share. It has broken its all-time-high records several times, becoming the world’s most popular and valuable digital currency today.
Digital currency experts say it is common for cryptocurrencies’ prices to follow a similar pattern. Platforms like Bitcoin Prime are also gaining popularity as more people trade these cryptocurrencies. However, the bitcoin price has fallen over the recent months after the previous price bubble. Nevertheless, bitcoin has emerged more robust than before after the drop in the price. The prices of all cryptocurrencies have relatively surged but, the bitcoin price is the biggest winner.
While the prices of digital currencies have followed a similar trend, bitcoin has firmly held its value much better than other cryptocurrencies. Bitcoin’s resilience over the other coins is because investors view it as a more stable digital currency. That means the continued surge in bitcoin prices could potentially mean more significant losses for the other coins.
The development of cryptocurrencies
Bitcoin also influences the development of other cryptocurrencies in various ways. Many cryptocurrencies available in the market right now are clones of bitcoin. For example, Litecoin, which was the first altcoin to achieve mainstream adoption, uses a copy of bitcoin’s code. Its creators thought doing so would offer a faster and lighter version of bitcoin. Other bitcoin clones include bitcoin cash, bitcoin diamond, bitcoin gold, and others.
It has been the basis of multiple studies about digital currencies and the crypto market. Bitcoin is the primary driver of the digital currency revolution that innovators look up to when developing other cryptocurrencies. Although many cryptocurrencies constantly try to become better versions of bitcoin, they only follow its lead. Therefore, bitcoin not only influences the development of other cryptocurrencies but their applications too.
The cryptocurrency market
Apart from being the world’s most valuable digital currency, bitcoin commands 50% of the entire cryptocurrency market. That has further stamped its authority and increased its popularity over the other cryptocurrencies. As some investors argue, bitcoin’s strong market position makes it seem like the reserve currency of the crypto market, like the US Dollar in global financial markets.
Bitcoin’s role as the leader of the crypto market has significant impacts on other cryptocurrencies. Its rapid surge has made the other digital currencies look inferior and less competitive, especially the smaller and new ones. As a result, many investors holding the other cryptocurrencies are likely to move their funds to bitcoin. That would significantly disrupt the market, depreciating the values of other digital currencies.
As the cryptocurrency market’s reserve currency, bitcoin’s fall could be devastating to several digital currencies and the entire crypto market. Its continued growth also threatens the other weaker and less-popular cryptocurrencies. However, it contributes to a net positive for the whole crypto industry.
Bitcoin is the original digital currency that paved the way for other cryptocurrencies. Thus, it has a more significant and widespread influence on the other digital currencies and the entire crypto market. It significantly impacts the prices, development, and applications of the other cryptocurrencies.