How Altcoins Can Reduce Bitcoin’s Grip on the Crypto Markets

The year 2022 has witnessed the largest bearish rally in the crypto markets. Bitcoin, for example, has shed up to 50 percent of its value since January 1, 2022, when it was also at the summit of a bull run. Altcoins have also felt the heat that has hit other tradable commodities in the stock market. 

A 20 percent loss in crypto value is significant in PrimeXBT’s cfd trading terminal, though such behavior is a highlight of a volatile market. Such a market is a clear sign of a shift away from crypto to other safer assets. Several less-known coins have resisted the market forces pushing down the prices of many assets. Their resistance and a potential future rally are down to the infrastructure they support. 

The Correlation Between Bitcoin and Altcoins

About a decade ago, when crypto was trying to break out from the confines of anonymity, Bitcoin had a market hold of about 95 percent on the broader crypto market. However, the number dropped to about 34 percent in 2017 when the markets rallied after a breakout of other cryptocurrencies such as ETH. Bitcoin picked again in 2021, driving its dominance to about 71 percent of the crypto markets.

Bull markets have been the turning points that have shaken the dominance of Bitcoin at the top, according to historical data in PrimeXBT. The recent bull market in Q3 2021 saw Bitcoin shed some of its grip on the crypto market, standing at about 40 percent. The reason for this is new investors seeking to take positions in the cheaper coins early, anticipating a massive rally that will make the small coins worth a lot more.  

The current bear market has pushed people out of altcoins. While some have moved away from cryptocurrencies completely, most have secured their positions with Bitcoin because it is the best bet to regain its value soon when markets become calmer. The exodus to Bitcoin at the time of the financial crisis means the smaller coins shed more value than Bitcoin itself.

How Some Altcoins Performed In 2022

Bitcoin shed over 50 percent of its worth from its November 2021 highs of about $65K. The figure is not much different from what other cryptocurrencies have endured within the year.

Ethereum has lost about 69 percent from its historic high. Cardano has outperformed Bitcoin in terms of value lost to reach a low of about 79 percent since the last crypto bull market that happened at the end of 2021. Solana and Dogecoin have managed losses of over 80 percent each in 2022 from their peak values back in November 2021. 

The patterns highlight that the movement of Bitcoin, whether bullish or bearish, pushes up or lowers the base value of other crypto assets.

How Altcoins can Reduce Bitcoin’s Grip on the Markets

At the time of an economic meltdown, the assets with a strong support are the ones that survive the hit thrown at them by external factors such as rising interest rates and increasing tension in Eastern Europe. While Ethereum has witnessed a massive tank that has shed nearly half its market value, the blockchain technology it fuels is still number one in the Defi space. 

The large hold altcoins have on Dapps and newer assets such as NFT could be helpful to navigate the turbulent times when investors are in a selling mood. People hoping to host their apps in the blockchain must still have ETH or any other crypto that runs a blockchain to accomplish their projects. The support cryptocurrencies give utility applications might one day crush the hold Bitcoin has on the crypto industry.

Bottom Line

Bitcoin is the Walmart or Amazon of crypto and has a powerful hold on the direction of the cryptocurrency market. Bear markets in Bitcoin, according to PrimeXBT’s price terminal, have often hit other coins harder. There is also a correlation between poor runs in the market and the stronghold bitcoin has on the crypto market. However, with the base technologies that support altcoins growing every day, the hold might end.