Why does Bitcoin move sometimes while altcoins (there are all other coins that came after Bitcoin and considered “alternatives” to it) don’t move then? Why do altcoins move sharply at times while Bitcoin falls or stays steady? Shouldn’t they all move together since they are all cryptocurrencies?
These are some questions I was recently asked by a relatively new investor in cryptocurrencies. So here’s my explanation on this.
Before we start, there’s an assumption I’m making here. A BIG one to that effect. The assumption is I/ WE AM/ ARE GOD and hence some of the things you read in the examples below may defy science or logic. But stay on..
What you see above is the solar system. The sun as you’d know is the largest object in our solar system and the planets revolve around the sun.
In our new proposed solar system of cryptocurrencies, think of Bitcoin as the Sun. Hence, all the other coins, altcoins, are planets orbiting the sun.
The sun as we know does grow and shrink. So does the Sun in our solar system – Bitcoin. Now when Bitcoin sees an interest (people start saying it’s the currency of the future, price rises), think of it as if the sun is growing. Have a look at the price of Bitcoin since January 2020
So as you see, the sun, Bitcoin, starts getting to heat up in November and moving up sharply. When it does so, its energy radiates all other planets (altcoins) in the solar system and they start to shine brighter.
Here’s a look at the chart showing the size of all cryptocurrencies (excluding Bitcoin) during the same period
So suddenly the entire solar system is growing, brighter and bigger.
While that’s the broader effect. BUT, on a day-to-day basis, the Sun (Bitcoin) and Planets (altcoins) are now in a tussle for space in the solar system. It’s getting crowded, yeah? So think of the planets having had formed a group, cause they obviously not yet in a position to take on the sun individually. So they’ve formed a group, planning a coup of sorts. And that’s what everyday moves are. It’s a fight between forces trying to establish dominance.
So there will be days when Bitcoin is king. There will be days when altcoins are king (also please don’t assume that all altcoins rise and fall together at the same time. There are other factors at play such as type of project, and so on). There will be days when both rise and there will be days when both fall.
Now obviously there’s just so much we can play God. right? Some things are always a risk when you’re involving the solar system. Let’s say the sun keeps getting big and stronger and the planets too. There comes a time when this is not sustainable. That’s when there’s a need for a pause to stabilize the system, and what you see is a market correction.
Check the charts below to see what happened in 2017-2018.
Bitcoin grew from the sub-$1000 levels to touch a high of around $19700. It then came down to approximately $3000.
Altcoins followed suit,
Of course among altcoins, a large number get destroyed during these times. That’s because they are simply unsustainable in these times. These planets were tiny and simply obliterate in such times, unable to withstands the chaos ensuing around them. Probably even getting sucked in black holes.
No one knows when these times come. Hence, invest wisely. You don’t want yourself having established homes on one such planet, only to soon be seeing yourself sucked into a black hole.
I see coins such a Zilliqa, RSR, NANO, QUANT, just to name a few (there’s loads out there) as strong planets. These are the Jupiters and Saturns and can withstand times of chaos. I do plan to cover more coins along the way and will soon release a list of 10 coins I think can do very well over this year and the next. So remember to subscribe.
Getting back. So once this chaos has ensued, the sun (bitcoin) now takes time to stabilize and settle into its new shape and temperature. The solar system again begins to find order amid the chaos, and the cycle continues.
Summing up,
- Know which planet you want to establish a home or homes on. Invest smart
- Understand that market tops and bottoms cannot be predicted accurately. You never know when chaos turns to order or vice versa in the solar system
- It’s always smart to establish a home on more than one planet. So diversify. There’s less risk of all your homes getting sucked in the black hole.
