Since its launch in 2009, Bitcoin has always been at the forefront of influencing the prices of altcoins. Exchanges have always compared altcoins’ price movements with Bitcoin’s.
Bitcoin has experienced many ups and downs, where it lost from 20% to 80% in a single day, but its core principle of decentralization has always made it reach new heights over the past.
Today, BTC has been hovering at around $35,000 per BTC, which was $68,000 per BTC in October 2021. When BTC was at its all-time high, crypto sector market capitalization nearly touched $3 trillion, of which BTC share was around $1.2 trillion.
According to CoinMarktCap, today the overall crypto market capitalization is $1.61 trillion, reflecting a decline in its share to $690 billion.
Bitcoin has always commanded a huge chunk of trading since its launch. You can say, it is the mother of all cryptocurrencies.
As the world’s first cryptocurrency, Bitcoin has never been hacked and has always stood the test of time. Many economists and finance experts dismissed Bitcoin as a Ponzi scheme or scam, but it always proved them wrong with more and more people adopting it and holding it.
Institutional investors hold billions of dollars worth of Bitcoin today. BTC’s acceptance among users is another reason why it is one of the most popular cryptocurrencies.
Investors based globally have launched various exchange-traded funds (ETFs) that invest exclusively in Bitcoin. As a result, Bitcoin has become a universally accepted digital asset. Also called digital gold.
Due to its limited supply, its value keeps on increasing and crypto experts say that one BTC can touch $10 million in years to come, as only over 2 million BTC is left for mining.
Almost all altcoins present today look to Bitcoin as a model for reshaping the flow of finance in the future for the public good.
Many crypto projects like Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond, and dozens more are just a copy of Bitcoin. Litecoin was the first altcoin that copied Bitcoin code and has become one of the top 25 crypto projects today.
There are close to 457 crypto exchanges according to CoinMarketCap where Bitcoin is being traded and this is a major reason for its impact on the prices of altcoins. If the price of Bitcoin rises, it brings a positive rally on the trading of altcoins too, and if Bitcoin drops drastically, all the altcoins lose heavily.
As a result, on 20 January 2022 Bitcoin trading at $43,000 fell to $34,631 on 22 January 2022, causing the market to fall from $2.02 trillion to $1.59 trillion, a decrease of close to $400 billion in just a few days.
Another important reason is that when other altcoin projects began raising funds in Bitcoin, investors had to buy Bitcoin first, and then invest that Bitcoin in any new crypto projects.
In the following few years, crypto projects started to build on various blockchain platforms, like Ethereum, Binance, Solana, and Polkadot. To invest in any projects based on those platforms, you need to own native tokens from those platforms.
When new exchanges started their operations, they were only listing Bitcoin for trading, because it was a well-tested crypto project. There were many exchanges that only allowed trading in Bitcoin. In many cryptocurrency exchanges, crypto-to-fiat transactions are not permitted due to compliance and regulatory requirements of their countries, and altcoins were always compared to Bitcoin, so this affected the prices of other coins.
Even new crypto projects began raising funds via initial coin offerings (ICO), which was the most popular method of raising funds with Bitcoin. They used to offer users their native token in exchange for Bitcoin, which again increased Bitcoin holders.
Bitcoin is based on a proof-of-work mechanism that is ensured by miners that are running its nodes. Bitcoin has been designed to function as a decentralized platform running on its own blockchain. Due to the effect of a high level of decentralization of the network, transactions are done on its blockchain to ensure flawless security.
Even though there are blockchains on which various altcoins have been built and become mass adoption coins, it is years away from surpassing Bitcoin in terms of value adoption and popularity.