Cryptocurrencies: 852,171
Exchanges: 1,031
Market Cap: $2,789,501,393,972
24h Vol: $103,368,980,126
BTC Dominance: 49.66%

Does the Price of Altcoins Affect Bitcoin?

A decent amount of price action occurs between altcoins and Bitcoin. An inflated Bitcoin price has a tendency to inflate some altcoins while leaving other altcoins stagnant. However, is the inverse true? Do altcoins have any impact on the price of Bitcoin? 

To answer the question, altcoins have little to no impact on the price of Bitcoin. There is a sort of special case with Ethereum, if you consider Ethereum an altcoin. Other than Ethereum, though, Bitcoin makes its own market.

Most Altcoins Don’t Impact Bitcoin’s Price

Most altcoins don’t impact the price of Bitcoin simply because Bitcoin has such a large ecosystem. By that we mean that Bitcoin receives more media attention, has more trading volume, more liquidity, a larger market cap, and is generally a much more mature/efficient market than any altcoin market. 

We’ll put it this way, Bitcoin has a market cap around $600 billion and the majority of the general public at least know the name “Bitcoin.”  Altcoins often have a market cap under $500 million and not many people in the cryptocurrency community know about some rather popular altcoins. 

It’s simply impossible for the price of altcoins to have any impact on the price of Bitcoin. Altcoins don’t generate attention to have any meaningful impact on the price of Bitcoin.

What About Ethereum Impacting Bitcoin’s Price?

The one altcoin that has the potential to have an impact on the price of Bitcoin is Ethereum. Even this is debatable because the price of the two are very synchronized, which makes it difficult to know if Bitcoin caused Ethereum to drop or Ethereum caused Bitcoin to drop. 

At this point, it’s likely that negative news about Ethereum could cause the price of Bitcoin to drop. Ethereum really did grow large enough in 2021 to have that type of impact on Bitcoin. 

Does Bitcoin’s Price Impact The Price of Altcoins?

Bitcoin’s price certainly has an impact on the price of altcoins. Unfortunately for altcoin holders, a rising Bitcoin price more often than not leads to low priced altcoins. This is because Bitcoin sucks all the liquidity out of the market. 

It’s not all bad for altcoins, though. A Bitcoin price plateau, or even slight decrease, usually results in a spike to the price of altcoins. This is likely because investors want larger and faster returns than the ones a plateaued Bitcoin provides. 

The cryptocurrency that has a bigger impact on the price of altcoins, however, is Ethereum. A price increase in Ether will almost always cause a price increase in altcoins. This is because most altcoins are ERC-20 tokens, so an increase in altcoin popularity usually goes in tandem with Ethereum.

Are Altcoins a Good Investment?

First of all, altcoins are officially defined as every cryptocurrency that isn’t Bitcoin. We find that definition a little too simplistic, but that’s the most commonly used definition. 

Anyway, we would classify some altcoins as a very good investment. Ethereum, Cardano, Polkadot, Chainlink, Avalanche and a handful of other cryptocurrencies are certainly very solid investments. Though it could be argued that none of those cryptocurrencies are actually altcoins. 

The altcoins classified as a bad investment are the more obvious scams. These projects typically have anonymous founders and a very small market cap and 24 hour trading volume. 

It’s fairly easy to see which altcoins are scams and which ones aren’t. It’s actually a little silly to put Ethereum in the same category as the blatantly obvious scam altcoins like SquidDAO.

Summary

To summarize, the price of altcoins has little to no impact on the price of Bitcoin. On the flip side, the price of Bitcoin has a large impact on the price of altcoins. A rising Bitcoin price almost always results in lower altcoin prices while a plateaued or falling Bitcoin price will usually pump the altcoin market. 

Now, this is all likely to change as the cryptocurrency becomes more efficient. However, at the current moment it’s undeniable that Bitcoin has a very noticeable impact on the price of altcoins. 

Does the Price of Altcoins Affect Bitcoin?