Why Do All Crypto Currencies Follow Bitcoin Trend

Hi Platinum Crypto Followers,

Hope your all enjoying the roller-coaster that this the Crypto market. Having received numerous questions about Bitcoin and why crypto seem to all follow the trend. I thought I would release todays article.

A quick update on the markets before we get into the main topic, with the recent trade war markets have currently be reacting very kindly on bitcoin whereas. Bitcoin continues to be termed as a global safe haven and as major market indicator. I wrote about this weeks ago Gold Vs Bitcoin check it out if you missed it.

Why Does the entire Crypto Market follow Bitcoin?

The price movement in the cryptocurrency market is largely affected by Bitcoin’s trend. Bitcoin prices keeps on changing and altcoins are known to follow this trend too. Major Altcoins such as Ethereum (ETH), Ripple (XRP), Monero (XMR) and Litecoin (LTC), are mostly affected by bitcoins trend with the others showing some slight similarity.

By virtue of being the first blockchain cryptocurrency to be created, bitcoin has been dominating the crypto market for quite a while. It started with 80% dominance since it was the only major coin but has latter dropped to 68% dominance in July 2019. According to reports, the 68% dominance recorded last month was the highest dominance level for bitcoin in the previous two years. This dominance has given Bitcoin some ‘powers’ to dictate the trends of altcoins in the crypto space.

Recently, bitcoin has been experiencing a bullish market momentum that has made it break the $12,000 resistance level. On July 10, bitcoin reached an all-time high of $1300 in three months. However, the prices fell to $9250 in the next seven days. This scenario was also experienced in January 2018, where there was an abrupt rise and fall in the prices of bitcoin. Currently, the prices are at $12290 as of 06 August 0600 (UTC).

As all these changes are taking place, the altcoins are also supposed to fluctuate similarly. The top ten altcoins always tend to follow bitcoins trend while others show mixed reactions. However, this is not the case in the past month. Altcoins have been showing a downtrend as bitcoin is rising. Consequently, traders have broken into a panic selling of altcoins. There are several factors that have lead to this scenario.

What determines bitcoin’s price

Supply and demand

In a nutshell, bitcoin’s price is majorly driven by scarcity, supply and demand. Like gold, Bitcoin is a precious and scarce commodity, and so its availability greatly determines its prices. The total number of bitcoins that can circulate in the market is 20 million. Currently, 16.2 million coins are flowing in the market. As years pass by, the hash rate for mining a bitcoin keeps on increasing and thus reducing the mining of the coins. If the supply of bitcoins reduces and its demand increases, then the prices will shoot, but if the supply is high, demand will reduce and eventually the prices will fall.

Government legislation and regulations

Governments all over the world are trying to classify bitcoins and cryptocurrencies so as to know how to regulate them. This has led to different countries putting in place varied regulations. Some go to the extent of restricting their usage or worse banning the coins from their jurisdictions. The rules make people to either invest in bitcoin or to withhold. The two options will make the prices of bitcoin to either fall or rise.


The electric energy used in mining bitcoins makes up 95% of the total mining cost. According to reports, annually, bitcoin mining may consume up to approximately 30T watts. Miners would then have to increase bitcoins price to make a profit. Also, the high electricity cost may make miners quit and in turn reduce the supply of bitcoins in the bitcoin market. The reverse is also true; when the mining energy is a bit cheap, the prices will drop.


After every four years, the bitcoin network reduces the number of bitcoins mined by miners. With time it will eventually reach zero when the 20 million bitcoins are circulating in the market. The mining difficulty consequently increases as controlled by the network. High difficulty means more mining power and types of equipment which will, in turn, lead miners to increase bitcoin prices and also the transaction fees.


Why have bitcoin prices risen?

The volatile nature of cryptocurrencies comes about by how the coins’ prices are easily affected by external factors. In this case, Bitcoin’s price has in three months only tripled its price from $4000 in April to $12000. There are several factors that have contributed to this rise.

One of these factors is the decision to devalue the Chinese Yuan by the central bank of China. The decision was reached upon by the Chinese government as a way of protecting the country’s economy from the trade war that was taking place between them and the US government. According to reports, President Donald trump had announced that US will be imposing 10% tariffs on $300 billion worth of goods from China. Investors, in turn, started to turn made bitcoin their safe heaven and consequently increasing the buying pressure.

Another factor is the expected halving that will happen next year: it takes place after four years. The bitcoin network is to reduce the number of minted bitcoins come May 2020. This means that the miners will be getting smaller rewards of 6.25 bitcoins. Fewer bitcoins will be circulating in the market, and this will consequently lead to remarkably high prices. It is likely that investors are taking advantage of the time left to stack up bitcoins.

Generally, cryptocurrencies have been going mainstream in 2019 with institutions all over the world adopting the coins. A good example is smart contract coins that have been used across several platforms. Bitcoin, being the domineering coin, has gained popularity among investors and institutions.

For instance, the introduction of Libra cryptocurrency by Facebook has made bitcoins price to rise tremendously. On the other side of the coin, bitcoin experienced a downward trend when Libra was being faced with cases in court concerning its authenticity.

Why is bitcoin sucking all the oxygen out of altcoins now?

As much as bitcoin prices are rising and altcoins are supposed to be pumping, the otherwise is happening. Altcoins are not recovering as bitcoin is. This scenario is majorly backed up by the fact that bitcoin is dominating the market, making investors opt to stick to bitcoins at the expense of altcoins.

Initially, investors would buy altcoins when bitcoins starts to scale up. However, this is not the case anymore. Investors are nor foregoing altcoins and are buying bitcoins instead. The change of perception may be backed up by the fact that bitcoin is now considered as the golden coin of the crypto world. As a result, altcoins prices drop, and traders who have them start to sell them off. Also, in most cases, if one wants to get an altcoin, they must exchange it with bitcoin thus the case.

Another possible explanation is that big whales in the market are manipulating bitcoins prices. The whales would hold back their money whenever they see an impending downtrend in the prices of bitcoin and leave the altcoins to capitulate. They will then decide when to enter the market and consequently control the price action.

Why are altcoins not pumping?

At the moment, the market cap of all altcoins combined is $95 billion, which compared to bitcoin’s, $210 is very low. As bitcoin prices are scaling up, most altcoins are breaking their supports levels. For instance, ETH crossed its support level of 0.025 BTC, XRP has broken the 0.0003 BTC level and gone further downwards to 0.000013 BTC.

Generally, when one sells altcoins, they receive bitcoins in return. According to the trends in the cryptocurrency market, the price of the bitcoin is supposed to rise when its supply is cut off. Hypothetically speaking, when the prices of bitcoin rise, altcoins transactions will reduce. This will, in turn, reduce their prices. This scenario is very rare, but possible.

Usually, altcoins are supposed to be pumping when bitcoins prices hike. The most common explanation for this unique trend may be that the factors causing bitcoins uptrend are not affecting the whole crypto market.

A good example may be the manipulation of bitcoin’s price, as mentioned above. When the whales in the bitcoin market hold or release the coins, altcoins are not affected at all. In this case, it seems like the whales may be releasing a lot of bitcoins into the market.

Generally, bitcoin has more retrial investors who regularly transact compared to altcoins’ market. The numbers of bitcoin exchanges all over the world are far higher than those of altcoins. Also, in the USA alone, there are more than 200 bitcoin ATMs where retail investors quickly trade bitcoins.


In conclusion, it seems like the trend is likely to get back to normal where altcoins follow bitcoins pattern. The crypto market is known for being very volatile, and these trends do not last for long. A similar trend occurred in January 2018, but the trend went back to normal three months down the line.

Also, bitcoin is now experiencing a bearish movement in its prices as it is with altcoins. This change in trend may be attributed to a shift in the factors that caused the short term reverse trend. These factors had a short-term effect on the market since they were more so, the factors that make the altcoins follow bitcoins trends are more dominant in the crypto space. This supports the fact that altcoins will be back to following bitcoin’s trend.

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