We see this question a lot:
“Why do alt coins suddenly take a hit when Bitcoin jumps up?”
Now if you aren’t familiar with alt coins check out our guide to altcoins here –> (Alt Coins)
Otherwise, there’s a pretty simple explanation for this, and it combines two things…
Here’s the most important part of why they start to jump.
Money is what this is about, especially made evident by the Cryptocurrency prices jumping up and down and back again.
This isn’t stable growth because a lot of people see it as a way to get more USD vs. getting more Cryptocurrency.
Which is called buying power and one of the main focus of next months premium report (get access here).
Thus, when people see Bitcoin jumping, they want to get in on the action.
With one Bitcoin being worth:
It only makes sense that people want to own one of the perceived quickest moving and the highest priced coins.
Heck, even Blockfolio allows you to see your total BTC with the price of all of your alt coins together.
Now, it also comes from the phenomenon of the bandwagon effect…
2) The Bandwagon Effect
People, especially with money and stocks, hate missing out on the action of anything.
That’s why pump and dump schemes are always around the corner.
And with Bitcoin, it doesn’t change.
People see Bitcoin rise and think “Oh golly or my, I need to get in there before it goes to $1 million as John McAfee said.”
They then proceed to jump on Bitcoin driving its price up higher.
But why do the alts suffer?
While exclusive of the total market cap, people see Bitcoin as a safer option.
Granted it is slower, elicits worse returns, and has a worse community than most coins; it seems safer.
Thus, as soon as it moves up people sell the gains they made in other coins to ride out Bitcoin.
Bitcoin’s recent movement is nothing.
What Do We At GCA Do?
That’s what we know how to do best.
And we keep the BTC we have as BTC, while allowing ourselves a smaller margin for trading, and the rest to be in alt coins.
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Thanks for reading,
The GCA Team