Bitcoin Forum

I would like to ask a very simple question to all you Bitcoin lovers out here.

"Explain to me, why it makes rational sense that the prices of most alt-coins (in relation to USD/EUR/Fiat) should become different when the price of Bitcoin changes."

Note that I am not asking why this happens at present. To put it a bit differently - if a regular dude with no knowledge of the crypto market would ask you:

Why is it sensible and/or "right" that the price of a given alt-coin asset valuation goes up and down when the price of Bitcoin (in most cases, a seemingly unrelated asset) moves up and down? How does the value of said alt-coin become more or less.. why does it make sense that the BTC price de-facto "decides" that whatever actual utility the alt-coin asset enables me to make use of (in-game currency, computing time, storage space, etc.) can now be had for a different amount than a few moments ago?

And, again, just to be sure - please refrain from 'arguments' along the lines of:

- It has always been thus
- Coz alt-coins are [enter your derogatory description here]


and so on. I want to know... why is this the right way for this market to function. How does it make rational, economic sense.

Thank you :)

The price of bitcoin is related to supply and demand. The fact that it is limited and the demand has, at least for now, increased has driven up the price.

Regarding alt-coins each case is different. On one side, their price is linked to btc in many exchanges and they could be considered a close substitute for bitcoin as a product. Thus the theory predicts that if the difference in price grows to high, the investor would buy the alternative asset perceived as better value. You assumption of these being unrelated is obviously wrong.

As for the intrinsic value perceived for these alt-assets, each one is different: limited or unlimited supply, real use cases, community support, developers support... If I had to sum up in one word it would be credibility, of which bitcoin has the maximum as of today.

Ok - you did not actually answer my question, but instead gave me a rundown of crypto basics and realities. I get those - I've been doing crypto for some time. I expected this would happen, this is why I was so explicit :) But let me try with a more elaborate example

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If I want to, say, store my files on a system like StorJ (just as an example, I am not particularly interested in them) - this would cost me some dollar amount, like, let's say, 200 dollars per year for a Terabyte. Now, to pay for that service, I need to get their tokens, let's define that as 200 tokens, at $1 each. I buy those tokens.

Now - a few moments later, BTC falls by 2%, and even though I have absolutely nothing to do with BTC, the StorJ service would continue to exist is BTC would disappear, my tokens now have a different value, like, I don't know. $ 0.97 instead of the $1 that I paid for them.

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All I want to know, and please, this is the only thing I am asking:

Why is it reasonable, rational or in any way "correct" that this has happened with my StorJ tokens?

What has the change in BTC price seemingly changed to the value of the service I can purchase for these tokens?

*I am using StorJ merely coz it is a known example and its function has clearly zero to do with BTC.

First of all, the rule has it's exceptions on every price fluctuation. It has happened that Bitcoin has fallen and certain altcoin was (still) rising.
But I think that Bitcoin price is a great indicator of the money flow in the crypto markets, especially as most altcoins can still be bought mainly only if you buy another coin first (which is usually Bitcoin).

So if investors decide to get out, they'll get out of altcoins and bitcoin too, hence the whole market will feel that.
And since the value of altcoin's in circulation is much smaller, they feel much heavier such a negative move.

If investors come in, it's a little different. Most will invest only in Bitcoin for being most known and for being advertised as less risky than altcoins.
Altcoins will receive funds later and in smaller amounts, but when that happens, again, since their value is not as big, they may get very nice growth.

And I'll come back to the fact most altcoins are bought by buying Bitcoin first. This imho makes imho unnatural to reference the altcoin price in USD and it should be in Bitcoin. Then you'd see the real fluctuations and may give you something close to an answer.

Historically, altcoins have often been traded against Bitcoin. And since (almost) all altcoins are created to make the creator rich, the ultimate goal is to get more Bitcoins.
Because of the lower market cap, altcoins often go up and down more than Bitcoin. When Bitcoin goes up, people sell it to buy more altcoins. And when Bitcoin goes down, the money from altcoins flows back into Bitcoin. It's a bit of a self-fulfilling prophecy.

Or a simpler answer: it's not crypto that goes up and down, it's fiat :P

Ok but back here in the real world and in the present, the vast majority of humans asses the value of a given service and whether it is a good deal or not in Fiat currencies. Now I am happy to agree this may not necessarily be the optimal solution and, yes, I know all the crypto-convert arguments why Fiat is also "made up" or a Ponzi scheme or [enter your pet theory here] and I can even follow the logic, but if I was to decide - hmm, should I invest in StorJ tokens, I will not be doing this on the basis of what BTC fundamentalists think the world should look like, but rather based on, you know, how it actually looks like, no offense :)

That there is some potential future world in which expressing the value of goods and services in Satoshis is going to be "the norm" and that such a world might actually be better - that's fine and I am not against believing this, but at the present moment telling 90%+ of people that something is "worth" 3453 Sats is virtually meaningless to them.

In that case: most stocks often swing up and down at the same time too, especially when they're in the same sector.

Well - you are describing what the crypto market looks like, making a number of assumptions and value judgments in the process, some of which I am sure are reasonable. Of course the relationship with BTC is not 1-on-1 identical, but if you look at these graphs listed here: https://delistbitcoin.com/Evidence.html (https://delistbitcoin.com/Evidence.html) you will see that the vast majority of coins are pretty much Coin X-flavored BTC.

But again, you are describing what the historical situation is - not why it makes sense that it is thus. When the guys at Filecoin make a profit/loss overview, they calculate costs like hosting, staff salaries, bandwidth, insurance, etc. in US Dollars; But the value of the Filecoin token used to utilize their service is constantly shifting, in no small part due to BTC price moving, even though their service has nothing to do with BTC. Any impact by the BTC price on the Filecoin token, however small, has no merit - nothing about the Filecoin value proposition changes as a result of BTC becoming cheaper or more expensive.

Of course Crypto-general impacts such as, say, news about impending crypto regulation, etc - that this impacts all coins, that of course does make sense, and I also understand it is a novel and pioneering market with major fluctuations being fairly normal. What I do not understand is how anyone can expect the crypto space to be taken seriously if all alt-coins are basically BTC shadows.

Ok - would you think it normal that you can buy any Nasdaq share in fractions of Apple or Google share...? (Where Apple and Google are assumed to be BTC and ETH respectively for the sake of the argument ie the top 2 assets)...?

That when Apple would get sued for, say, exploding batteries and its share drops 5%, all Nasdaq shares also drop, by at least double that...? Would anyone think that is a functioning market? Coz that's the crypto market.

You seem to be overlooking exactly what I meant as answer. I'll try to broaden that.

They are not shadows, but most of their price fluctuation makes sense only if you look at it in price vs Bitcoin.
There are far too few coins that can be bought directly for fiat.
Most of the altcoins and tokens can be traded against Bitcoin and many day traders do this, making the coins look like depending on Bitcoin.
Most Bitcoiners also don't take altcoins serious. But it's altcoins' community who has to do something about it if they think they can do it, for example make their own exchanges where Bitcoin is not accepted and only their coins vs fiat will work. Then they'll break the chain and either go out of the shadow, either (more likely) disappear.

Is this a better answer?

You are right about this one.I can't take the cryptocurrency markets seriously,since almost all altcoins are tied to Bitcoin. ;D
Maybe the problem is that we are comparing cryptocurrencies with stocks.
If you take a look in the stock market-one company produces shoes,other company is making pharmaceuticals,a third company is offering an online service.They have different businesses inside different industries.
In the cryptocurrency world,each coin serves the same purpose-to be a medium of exchange and a store of value.
This is like comparing a fruit&vegetables market that has all kinds of fruits and vegetables with an apple market,that has only apples-green apples,red apples,big and small apples,but only apples and nothing else.
To me,cryptocurrencies are like apples and stocks are like all the fruits and vegetables.
This is a pretty simplified explanation,but I kinda like it. ;D

I don't know if this the economic theory correct explanation but I can tell you how I look at the crypto market and each individual alt coin. Every country has their own currency which is usually traded freely on the forex, there are some special cases where this is not true but this is usually because the country is actively trading on the market to influence the price. USD is the world currency number one so most other currencies are quoted in USD terms. In my opinion the exact same goes for crypto currencies. You could say that each crypto coin is like the currency of a small country. The price moves freely and is not pegged to bitcoin or Usd.

Well - yes :) Though it is interesting you say make it look like it depends on Bitcoin because that actually is part of the problem :)
And I suppose I should have included stablecoins as de-facto equivalent of Fiat currencies, though I am no fan of USDT, to be clear.

Now - from a "BTC fundamentalist" point if view I perfectly understand the... not so flattering opinion about alt-coins, and given the amount of scams and crappy projects out there I can't say it is a surprising attitude, granted. But what I am concerned with primarily are "regular" folks that might want to invest in an alt-coin project because, well, they believe it to be a good project, and wish to buy the tokens that "run" the platform. Whether or not that is a wise investment is another story, but regardless of its merits, the price of BTC is not part of those merits in the majority of cases. Or, well, I am still waiting to hear a valid explanation why it would make sense that it actually is :)

See - by having this kind of market where BTC is basically the only game in town, I think it is reasonable to say that it makes the market as a whole into a mockery, and far harder to take seriously. There are quite a few "alt-coin" systems that actually are pretty good; maybe not in the eyes of BTC Believers, but certainly by, if you allow me to be so cheeky, more... "objective" standards ;) In turn, this greatly delays that Satoshi-denominated future many of you wish would happen tomorrow. What's worse - it gives time to Central Banks to get with the program and devise their own crypto-similar systems and THAT, my dear fellows, is something we definitely don't want.

That is indeed how it should be - the price moves freely and is not tied intimately to the US Dollar. I mean if the US economy will tank tomorrow because, say, it has been discovered that the GDP dropped by 10% due to COVID, then sure, many other currencies might also take a hit, though the impact would be far less than alt-coins take when there is some bad news about BTC.

I'd recommend opening two browser windows, open one, on, say, DOT, and the other on BTC, and just look how DOT is following every single BTC move for 90% of the time. Sure, if something awesome just happened in the DOT space and people are buying it like crazy it might escape BTC gravity for a while, but that happens quite rarely.

And so if DOT was a country, their whole economy would shrink 20% in value when BTC drops by, say, 8-12%, even though absolutely nothing has changed in DOTLand. The same factories are still making the same stuff, people working in them make the same amount of DOT, and a loaf of bread is still 0.034 DOT - yet, on the "global market" the DOT currency just lost a fifth of its value. For no discernable reason that can be blamed on the DOT economy...

Thank you. :)


It's the way the markets/exchange are done. That's all.
I'm not convinced that you can get a better answer, I'll keep an eye though  ;D


I am also "fond" of a few altcoins there and believe me, I've seen now and then (especially in my early beginning when I paid more attention to altcoins than Bitcoin) discussions for decoupling from Bitcoin. Nothing worthy has happened in that direction.


There's a mistake here: Bitcoin "believers" and greedy "investors" (speculators) who can't wait to cash out are not the same thing.


Central banks are expected to compete with USDT, not with Bitcoin, actually.

Because storj or chia or enjin or cliliz or cosmos , none has actually shown to be of any utility outside trading and hosting some tokens on their chain.
None! And the guys holding those tokens are in 99% not interested in the actual utility if that ever comes true but the price of the coins when that becomes a reality.

And this brings us to the valuation part, if BTC goes down it means people are panicking we are entering another bear market and they know in such times most try to invest less and stick to the coins that are safer and not dependent on some unicorn dream project but overall value, so that's why altcoins usually come down faster than BTC. It's a matter of trust, if trust in BTC that is seen as the leader of the crypto world goes down it means something is going wrong at the base, so other coins are far more exposed, especially those that target a niche that might never embrace them.

&

I don't understand either how some altcoin lovers think that everything on this planet needs a token and a blockchain to function and every single coin out there will have a purpose. That's the problem, you're treating those altcoins as something more than gambling and investing when it has been proved over and over they are actually nothing more, their value is not related to their utility but to the market sentiment, and that's decided by BTC. Like any company, since those "projects" are anything but decentralized, its value should be low before it can actually deliver something, not priced in billions when all they have is a token and a whitepaper. If all the value came from the crypto hype, when the hype is gone so is the value.


 

Ok - well, thank you all for your answers and comments so far, let me process this and I shall come back later with a few thoughts...

Just for the record let me perhaps state my objectives/position... I first heard of Bitcoin back in 2010-2011 and was immediately sold on the vision... I believe most people, even a substantial part of hardcore crypto-afficionados, do not actually understand what a total gamechanger crypto is for, well, everything really. The fact non-governments can now make a functional medium of exchange, a programmable one no less, is possibly more revolutionary than the invention of the wheel ;)

But - I greatly resent the fact that, as NeuroticFish already alluded to, the crypto space is filled with speculators, scam artists and similar short-term gain seeking actors that give the entire space a bad name, and obscure or render irrelevant the more... "ideological" side of it. Though to be fair, I am unable to condemn such people because, well, what are you gonna do, seeking to enrich oneself is hardly a crime... but they do screw things up and pollute the narrative.

What I want to see is an evolved, more serious, transparent and more accessible crypto-eco-system (not just market, though of course that's a big part of it) so the world at large may gradually start seeing decentralized information and value exchange systems as a viable alternative for the rather outdated systems of governance and management that we have today. I believe that BTC dominance, both in terms of market share and "marketing"/mind-space is detrimental to the speed at which this can be achieved, though I am no BTC hater ;)

At any rate- thanks and I'll be back soon with more whatabouterism ;)

You can buy apples in oranges for all I care: as long as you find someone willing to sell it, it's possible.
For shares, it's more common to use fiat though, just like for virtually anything else on the planet you can buy.

That was the first thing that came to my mind when considering the question--and there's really no other explanation.  Supply has a lot to do with an altcoin's price, which is why doge has never hit $1 and probably won't stay at $0.33 for long.  There's just too many coins on the market and insufficient demand to drive up the price any higher.  Then you have coins like bitcoin, Dash, and some others that "only" have 21 million or so coins that will ever be mined.  Demand affects their prices much more dramatically since there's generally fewer coins available on the market.

OP, supply and demand drive prices for pretty much everything.  That's why it's taught in every introductory economics course--it's a fundamental principle of how things get valued.

Probably thesame  way the increase in the cost of transportation affects the price of important goods that are transported through public/private vehicles... And that could have ripple effect on the prices of other basic goods and services. The networks/systems are somehow interconnected. You can break away from this if you could somehow become fully independent of the networks, and probably use a better model others can find reliable and safe.

There are several factors for this, one of them is the market dominance of bitcoin, now you may see the market dominance of bitcoin at 41% and think it is not that high but that metric is wrong, when we take into account the number of things that are actually bought and sold for cryptocurrencies we find out that 99% of those transactions are done with bitcoin.

Meaning altcoins so far do not really have a real use case and instead are used only for speculation, which means that at the smallest movement of bitcoin those coins tend to follow bitcoin, whether this movement is up or down.

I believe it's purely speculation which determines the increasement in altcoins' price following bitcoin's trend. It's a signal the market is optimistic and investors start putting their money into crypto currency in general, not only bitcoin. Probably it's a strategy to diversify their funds and increase their chances of holding an altcoin that might rise percentually superiorly to bitcoin on short run.
Some people call it altcoin season, however I believe such thing doesn't exist, because the whole market is driven by bitcoin's fluctuations.

Well I do think that , it's because people define cryptocurrencies with Bitcoins. If the market is down they assume that the Altcoin price will also fall down therefore they sell and thus make it happen for real.

Other than that they use Bitcoins and Altcoins for trading, therefore the price of Altcoins is sometimes in synergistic relationship with Bitcoins which mean when the price of Bitcoins fall the corresponding traffic that was going to Altcoins also falls.

This might be irrational but the whole crypto market is hugely interrelated which causes the prices to spike up together and to fall together too.

Because a large portion of alt coin prices is based on btc:alt-coin trading pairs, so the price direction of bitcoin necessarily drags the price of alts with it.  If you were only to consider fiat:alt-coin trading in determining the price of a particular alt-coin, they would move much more independently.  But because BTC is so dominant in determining the market cap and price of alts, the alts are highly correlated with BTC.

There actually is no market function that we have in play here. You can say that this is an altogether new market function created by the alt market itself. The one reason here is that Bitcoin is considered as Dow Jones of the market. It has 40-50% dominance which means most of the crypto market is just Bitcoin. Which gives it a look of a barometer of the whole market. Because if Bitcoin is rising which means the Investor's confidence towards the whole market is good but when it's falling the investor's confidence towards the whole market is grim.

Talking about how it might have started is because most of the exchanges had only BTC-Alts trading pairs earlier which means you can sell your Alt but would still get just BTC. This means when BTC used to fall people used to sell their alts and come back in BTC and that's why alts fall even harder than BTC.

Moreover, This isn't anything entirely new. If you see even stock markets. When DOW jones or any other index goes up the stocks which aren't even part of the Dow Jones tends to go up.

I've also wondered about that, my best guess would be because Altcoins are being traded as a pair with BTC (LTC/BTC, ETH/BTC for instance). On top of that, Bitcoin is the flagship of cryptocurrency, thus it's considered a sign of well-being for the market. Moreover, all of them are closely related due to their nature, sharing major characteristics with each other.

On the other hand, there are a few instances in which these rules didn't apply 100%. It doesn't necessarily mean that if Bitcoin goes down, Altcoins crash too, or the opposite, but that's what happens usually.

Yes! I am very pleased to see that you and I have indeed reached the same conclusion, which is that the main (or perhaps only) reason why alt-prices are so inextricably linked with the BTC price and its fortunes are those trading pairs. In fact, I have made an entire website about just this problem right here: https://delistbitcoin.com/ (apologies for the click-baity domain name, please excuse excuse my nod to populist rags)

the increase in the price of bitcoin or altcoin is based on the large demand for that asset. and the demand is usually based on many factors. and of course sometimes whales give a big role to increase a coin. for example bitcoin where Tesla announced the use of bitcoin, and the price immediately skyrocketed

OK so the price of the alt-coin is only tentatively correlated with its demand, that's the whole problem. At time X, with BTC at 40K, the price for a DOT is $40. At time X+3 hours with BTC tanking to 33K, the price for DOT is $24. Now - if you can please explain to me what, exactly, the price of BTC has made different about the utility, desirability or demand of DOT, I am dying to hear it. Of course, the answer is
"nothing" and that is exactly why having BTC trading pairs where the BTC volatility automatically impacts all other assets a really bad idea.

If you were tasked with designing a market for the trading of some type of asset... if your design included this kind of behavior as a feature, everybody would think it's a really crappy design. Yet here we are.

How about you answer yourself another thing first. What's the utility, desirability, and demand of DOT?

And to understand it better, you should know that I had to check coingecko as I had no clue that DOT stands for Polkadot, nor do I know what this coin is supposed to accomplish or to solve. And another question, if I'm probably unaware of it, has it today fixed any of those things, has it revolutionized something worth mentioning? My hunch is no. My hunch is that everyone that holds those coins is interested in the price, their trust in the utility is zero, they are just waiting to make some profits, dump it when its clear the coin will not be able to do a x5 overnight, and switch to the next altcoin that promises the same revolution we've had 200 times already.

Also, if there was distinct utility, desirability, and demand for it, why did it get influenced when BTC skyrocketed?
What changed in the utility, desirability, or demand between November 2020 and February 2021 to make the price go x7 in value?

And yet again, this is not actually an answer to my question.
Even if ALL alt-coins, every single one of them, is a total scam, a useless waste of space that nobody should in their right mind want - why should the price of such a hunk of useless have anything to do with BTC? Why should its price go UP if BTC goes up? Down when BTC goes down? Even if the only "utility" it might have is to waste people's money and provide pointless work for dead-end projects... what does it have to do with BTC?

In fact - if you think BTC is so wonderful and fantastic - why would you want these totally useless coins to "take advantage" of BTC price rises...? If you think alts are dumb nonsense, wouldn't the world be a fairer place if they could not profit from BTC price gains...?

I am yet to hear why the value (or,. if you want, degree of uselessness, whatever) of DOT, ADA or ATOM should change because the value of BTC has changed. And let me re-iterate once again, because it looks like this distinction can be hard to keep in mind - I am not asking WHY, in the current market setup, it changes, but why it is rational and/or reasonable that this should be so.

Your opinion on whether alt-coins are useful, nonsense, great or a scam has zero bearing on this question.

On a personal note as an aside, if you think the DOT system makes "no improvements" on the BTC architecture I think you need to ask yourself how you define "improvement". And that's after convincing yourself that somehow magically bitcoin is the only software in the history of mankind where version 1.0 was the best one to be ever released and continues to be so more than a decade after launch.

Because you don't seek a real answer, you seek an answer that you want to hear and you dismiss everything else because you don't like it.


Mine yeah, but when mine is replicated by a hundred thousand that think the same, look where your utility is going, down the drain!
So rather than dismissing my opinion, you should look at how many think the same as me and how many think like you, obviously from the dump that correlates with every bitcoin price dump my horde is bigger than yours, and that's what decides the price.


I don't want to but at the same time I can't stop them and I don't care about them at all, everyone is free to make his own choices, remember? Freedom, my money, my decisions, my keys? The coins are going up because of speculations we're entering another bull run, speculation that more money will be invested, enough to finally dump the coin and count the earnings in fiat.
And you're mistaken if you think I believed even for a second that people who are holding bitcoins right now are doing it for some idealistic world or financial revolutions or something, maybe 1-2% of them are still believing in that,  the rest are just like the people who went into altcoins, doing it for the gains in fiat. And that's one more reason why you have the markets move in the same directions at the same pace.


For some people it doesn't make sense that the Earth is not flat, that doesn't change things, we're telling you what's happening in the markets and why this is happening, the fact that you don't want to accept the answers as rational doesn't mean the answers are not true.


waves, nem, zcash, dash, iota, neo, eos....
I've heard of so many "improvements" that I can't help but laugh whenever another revolutionary coin comes to "improve" something that works so fine even without a token or a coin.  But again, you're trying to see something that is not there and you're calling everyone else blind because they don't see the same mirage you're admiring right now, just don't get too caught up in it and lose common sense.

Nope - it's because it does not answer my question. What you and most other people in the thread here do is explain how the current market works, not why this is how a proper market should work, and why it makes sense that the price of BTC basically dictates the prices of every other asset.

Let me try with another example.

Suppose - BTC is a steam train, that revolutionized hitherto horse-drawn transportation. A marvelous feat of engineering.
Suppose further that alt-coins are airplanes, ships and trucks.
In your case, I suspect you will say alt-coins are trains that run on spaghetti tracks and melt when it's too hot - that's fine, it doesn't matter.

What does matter is - each time there are supply problems with coal and the BTC train network has problems, the prices of air fares, shipyards and trucks also wildly jumps up and down. In your case, coal price rises cause havoc in the spaghetti rail business. When governments threaten to regulate those damn noisy train machines and shares in the steam train business dive, at the same time shares in airlines and shipping companies fall even more.

What I want to know, is how is this a healthy market? How does it make sense? Why should an event in the steam train business impact any other business at all? Maybe you don't like flying, or you get sea-sick on boats - OK, you don't have to like boats or airplanes... but why should developments in the train market impact those markets? Because that is basically the situation.

You are not sticking to the topic; I am not asking for a value judgment on the merits of alt-coins, or whether they are worth anything. I am asking you why a movement in BTC price should have any relationship with the price of alts. You talk about people having a choice, but the truth is that this choice is severely restricted and far less meaningful than it should be. The fact you evidently think investing in alts is a silly choice - that's fine :) But all this is not relevant to the question.


Let me phrase it some other way still.

If I asked you - Stompix, I have invented a new type of asset, and I need you to come up with a design for how a market to trade these assets would work. You diligently get to work, and come up with a model for a market that makes sense. I'd bet my life on it that the feature "prices of all assets are derived from and/or go up and down with the price of the top asset" would not be a part of that design.

Yet, that is the current crypto market design.


That the earth is not flat is a fact that can be proven by empirical study. Your answers are correct (albeit slightly biased against alts) if the question was "Explain to me how the prices of alt-coins work in the current market design" - but that is not the question. I guess what I am trying to illustrate is that the way the market is operating right now is very far from reasonable or sensible; and again, you are totally free and at liberty to not give a s**t about alt-coins, that's totally cool. But surely even if you totally don't care about alts, you still gotta admit that the influence of the price of BTC on their value is absolutely without any merit.

Take game tokens, for instance, like MANA or ENJ. They have absolutely nothing to do with BTC. BTC could disappear tomorrow, nothing in their neck of the woods would change. Yet, if BTC price moves, so does theirs. This is ridiculous; in-game items don't suddenly become worth less or more, the games they are used in do not depend on BTC, BTC has nothing to say or add to those ecosystems. Yet it directly impacts tens of thousands of users as their tokens change in value for no reason that has anything to do with the economies of said tokens. And just to be clear - I don't hold any of those and personally don't care much for them, but I DO care about the broader crypto landscape that is basically "held hostage" by the fortunes of BTC. Surely, even if you think alt coins are nonsensical, even you should think that to be incorrect :)

OK, congratulations!
I have been lurking in this forum for about a year, while greedily searching out every bit of information and education I can find before finally pulling the trigger to start investing into Cryptos. In all this time, this is the FIRST time I have ever been tempted to register and post.

With that in mind, let me see if I can make a worthy first contribution by formulating and articulating a valid theory to ponder.

First let me explain, that in my view, the value of BTC as all crypto coins are a sum total of 2 primary types of value, "Intrinsic" & "Speculative". Many express this as "Supply & Demand" but I see that as FAR too generic for Cryptos and certainly so for this conversation!

Bitcoin's Intrinsic value is as a world currency not tied to any specific country, government, or market & as a store of value to hedge against inflation. Of course it's Speculative Value is based on the world's perception of what it is and will be worth at any given time. Currently, with it's price bouncing around the area of $36k I would estimate it to be about 33% Intrinsic and 66% Speculative. Back in April when it was at ATH range of $65k I would have (did) judged it as 20% Intrinsic & 80% Speculative. The Hype and the Pump of "Bitcoin Reaches ALL TIME HIGH!!!" Drew a lot of attention and people were paying outrageous amounts out of pure FOMO. But then w/ EM's Green FUD and China threatening to cut off ⅕th of the world's population from trading BTC the Speculative Value (SV) has diminished as the Intrinsic Value has stayed relatively stable. Now of course that's not to say the Intrinsic Value (IV) can't be increased or decreased by drastic measures, I just don't think it really has. Maybe it's grown by 1-2% but that's it. Now if China truly cut out ⅕th of the world's population from ever using BTC, that certainly would decrease it's IV overnight! (I just don't believe they did or even can)

Next let's talk about the fact that 99% of the general population, when they hear "Cryptocurrency" immediately think "BitCoin". It's just a fact that most people know very little about the Crypto market, even including a large percentage of those IN the market. There's a pretty significant learning curve and in general, interest/hype about BTC is the primary gateway to opening that Pandora's Box. So if BTC is getting nothing but FUD or worse absolute silence, then there is no growth, no new blood entering the Crypto world and therefore the SV shrinks exponentially and even the IV may retract a bit. Now since you gave the example of an AltCoin utility token for data storage (I don't remember it's name, I'd never heard of it and it doesn't matter) to build on your example. Maybe it's really useful as a cloud storage solution and has a lot of subscribers buying tokens to store and transfer data, so maybe it's IV is 75% and it's SV is only 25%. So since most of the population equates Crypto with BTC, a majority of the SV of all coins comes from people's perception of BTC. So if BTC's value hits the roof and goes to $100k (SV85%/IV15%) then your AltCoin that was $2.00 (SV25%/IV75%) would likely go up to about $2.75 (SV30%/IV70%). More people would be introduced to it due to the Hype of BTC equating Hype in the crypto world as a whole, but it's primary value is IV so it's SV would only increase marginally from those that actually took the time to learn about it. Of course if it was DOT at $2.00 (SV99%/IV1%) the same 300% jump in BTC price may take it up to $12.00(SV99%/IV1%).

So why should it be this way? Well, something has to create the Hype to bring in new blood to learn about the formidable new world of Cryptos, and who better to splash the headlines than the Big Original BTC? Consequently, we end up with various ShitCoins that pop up randomly riding Hype bubbles and Pop into oblivion because they had no IV, but at the same time the coins that actually seem to be built on IV get their healthy boosts of SV along the way without ever really being distracted from what their original value really was (LTC & ETH).

So there's my theory, as best as I could express it in limited time. Go ahead guys, proceed to tear into it.

You see, that's the problem, you're from the start trying to see things that are not there.
How about you do another, far more accurate comparison, bitcoin is gold, ethereum is silver, and the others are some other precious metals.
When the precious metals market goes down the drain because India is not buying gold as it used to everything goes down. Fact!  ;D Reality!  ;D

In your example, you try to picture those coins as things that have already proven their utility when none, absolutely none of those coins has ever done something worth mentioning even in real life, and to confirm you that I'm not that biased as you might think, look even at BTC, do you see millions using it daily? We're down 15% in capacity and fees are low as 4sat last block because usage is losing big time compared to holding and speculation
Rather than seeing altcoins like airplanes, you should look at them like the Concorde or flying cars, extraordinarily on paper but not economically feasible or attractive in real-life situations.
 

And again you fail to understand the fact that is written with 100 miles tall letters in front of you, that their whole value is just speculation that somebody will pay more than what you've paid for. Users? Lol, don't make me laugh, 1000 transfers a day out of which most are actually people deposition and withdrawing from exchanges? Look at them in blockexplorers, I see Binance and Huobi every three lines, and that with a lot of exchanges not yet tagged.
You're starting to look more and more like a gamer who meets some guys for the first time and he thinks everyone is insane because they haven't heard of fortnite. Well, surprise, unless you let go of your own biased you will not be able to see things how they really are.


Loved this one  ;D ;D Damn this was good!

I originally typed DOGE, but then realized I just didn't want to deal with all those decimals. $0.20 (99.999%SV/0.001%IV) and I still think my decimals are too far right!

When the price of bitcoin falls and affects other prices such as altcoins it is due to the effects of the FUD. It is generally caused by several factors, such as the most recent. Ban a Bitcoin by the government of Turkey, Fud the government of China, the influence of Elon Musk's tweets, there are so many elements that affect market prices (Central Bank, Governments, FED, Influencers, etc.).

The crypto market is dynamic, volatile and never sleeps for beginners it is difficult to get used to for those with experience the best defense is hodl. Being a holding bitcoin and in cryptocurrencies is a great challenge.
To know how we are doing, I agree with this article:

https://cointelegraph.com/news/bitcoin-price-drops-below-35-000-pulling-altcoins-to-multi-month-lows/amp (https://cointelegraph.com/news/bitcoin-price-drops-below-35-000-pulling-altcoins-to-multi-month-lows/amp)

Ok so if that example is what you call "fact" or "reality"... then there isn't much we can talk about.

Exhibit A: https://delistbitcoin.com/media/metals.png

I've quickly compiled a number of metals and it is readily self-evident and amazingly obvious that gold has ZERO to say about the prices of other metals. Go take a look.
Frankly this example is SO bad I actually propose you retract it and we'll all pretend you never made it.
If those are the kinds of "facts" you base your arguments on then I am happy we disagree ;)

Source: https://markets.businessinsider.com/commodities/palladium-price (https://markets.businessinsider.com/commodities/palladium-price)
(in case you need a fourth example just how Gold has nothing to do with the price of other precious metals)

Basically -  Not Even Wrong https://rationalwiki.org/wiki/Not_even_wrong (https://rationalwiki.org/wiki/Not_even_wrong).

Well, different alt coins has their own value and functionality and hence their prices move up and down because of investors or big business who want to actually utilize the coin instead of just trade and making profits! Now, all most all alt coins are based on the idea of block-chain and Bitcoin in fundamental level and so they also go up and down as the demand for that fundamental value increase or decrease!

I think you are looking at this as a person that are used to "fiat" currencies as a medium of exchange. Fiat currencies price does not fluctuate a lot, because the value is manipulated by the Reserve Banks. Bitcoin is a lot more volatile and it is a challenge for merchants to adapt to that, without using Payment processors.

The Bitcoin price will also become less volatile in the future, when bitcoins gets distributed to more people and you will have a scenario where there are less whales to manipulate the price. (Large Whales are currently manipulating the Bitcoin price)  ::)

I wouldn't know about DOT and I can't tell you why it is good or why it is bad because I never made a research about it and never invested into it and that is why I am not a good expert to answer that question. But I can make a little change about the question and can give you a very very good answer.

Why do you think dogecoin went up? Why do you think eth went up? Why do you think anything goes up? Do you really think that all do look alike? Maybe that is the case? I mean not everything goes up just because it has a utility, there is nothing desirable about most coins but they are high all because there is a pump and hype for it.

It means it could be something very usable just like bnb or eth, or it could be something silly like doge, none of that matters, as long as there is a hype about a coin, that coin will go up no matter what type of coin it is.

Very simple. This very answers spells it all and its not bitcoin alone though, this is what bitcoin actually capitalises on. It uses the amount of bitcoin in circulation to make this fluctuations with regards to depreciation and inflation come true.
Bitcoin was created to have a definite number for which, once the miners get to attain that number, there would no longer be any new bitcoin to introduce to the market. All that was to create that element of scarcity about it.
Like, if you take a look at the Cryptopunks form of NFT, its got a definite number. I think they tapped into bitcoins scarcity principle just that, its not mined. Its transferable from person to person on a bargained range. So, its no mystery, its just the law of demand and supply in action.

I don't know how true it is, but bitcoin is seen as an important asset in crypto and contains more than 30-50% in daily volumes. So a sensible way of telling you about that is -
Bitcoin rises in price, and alts are pegged to it so when btc/usd pair rises, ultimately the value of alts will also rise because btc now holds some extra value and the alt has also increased in both btc and usd or usd only.
For price decline, it could be -
Btc price comes down, so users sell alts to 'buy more btc for cheap'. That is only the reason based on my findings.

I now understand why they show those cards with spots when trying to diagnose possible....hmm... issues, some people see things where there is none and some obviously don't see a train coming. You desperately try to see things that are not there and at the same time ignore obvious facts.

Let's check the last year:
March 15, gold goes down, silver does the same
Start of August, silver makes a new ATH for the year, oh, wait, so does gold
November 27, after continuous decline what do they both do...of crash the same time.
When was the last dip, of it was March 31 for both silver and Gold....man this is weird.

Let's try a different approach, let's do the full 5years graph
Price of gold 5 years ago July 1, 2016  $1,331.75 oz  Price as I speak $1,910.64    43%
Price of silver5 years ago July 1, 2016      $19.24 oz   Price as I speak  $  28.02     45%

Looooooooooooool!!!!!!! Indeed, such a difference, 43 vs 45! A whole 2% in 5 years!!!!!

But you're right, I made a mistake, I mentioned things that actually have a purpose in life other than speculations unlike all those shitcoins you're so proud of.
Copetech has given you a brilliant answer, if you're too dense or too biased or too angry with the world to get it, sorry, I have no way to help you anymore, so it was a pleasure, but it's goodbye!

It's possible that it could happen, but there is also another possibility, when the altcoin price drops, they place it on usdt to find good areas to buy bitcoin. bitcoin is seen as a good asset, so if there is a decline or correction then people will look for areas to buy back

But you are thinking this with the wrong perspective, the dynamics of this market were not designed, they emerged spontaneously, satoshi created bitcoin and then the first altcoin was created after some time, at the time we did not had stable coins and exchanging our coins for fiat the way we do now was impossible so the natural pair for any altcoin since that time has been bitcoin.

So what we are seeing now is a remainder of those times and when we take into account the lack of real use cases for most altcoins then it is completely natural to see this market behavior.

Your question has been answered, so do not confuse your own lack of understanding with other´s not understanding you "question". Please care to use bold characters when speaking with your family and friends or others that are happy about it - if you expect an answer that is.

It is Economy 101, which you obviously do not have a hint about - my only doubt is if it is really worth explaining to you like if you were a 6 year old (maybe you are). This has nothing to do with crypto, this is basic theory of how a competitive market with close substitutes work (https://en.wikipedia.org/wiki/Substitute_good). I am sorry if you lack the basic understanding of how economy works. - StorJ is a "substitute" asset to bitcoin so the buyer would be considering buying one or the other for their store of value or future gains or other qualities (uniqueness, future expectations...)

Please familiarise yourself with the basic concepts of economy if you want to chose a user name such as Eye4Finance, Mr Momentum, etc.... Just to avoid making a fool of yourself.