Why does Bitcoin rise and other currencies follow suit? When BTC falls, the entire currency circle also falls.
1. The impact of BTC trading exchanges. As we all know, both mainstream exchanges and small exchanges currently have BTC/other currency trading exchanges, and the frequency of investors using BTC trading exchanges is second only to USDT trading exchanges. In this case, when the price of Bitcoin's legal currency falls, the impact will naturally be transmitted to other currencies through transactions, causing the prices of other currencies to fall. Some friends may not understand this.
For example: If the legal currency price of BTC is US$10,000 and the legal currency price of ETH is US$1,000, then the transaction price ratio of BTC/ETH at that time is 1:0.1. If Bitcoin falls and falls to $9,000, and the BTC/ETH trading ratio remains unchanged at 1:0.1, the legal currency price of Ethereum will change from $1,000 to $900. This resulted in a situation where Bitcoin fell and Ethereum followed suit.
2. Anchoring effect At present, the main players and quantitative teams of most currencies (other currencies except Bitcoin) will anchor Bitcoin and determine their own strategies based on the rise and fall of Bitcoin. That is to say, the main players will monitor the price of Bitcoin. When the price of Bitcoin drops, they will choose to sell other currencies they hold. When Bitcoin rises, they may choose to buy or pull orders. Wait for operations. In other words, the main players in other currencies will largely refer to the trend of Bitcoin in their trading strategies.
3. The influence of Bitcoin In fact, the two points mentioned above can be summarized into "Bitcoin influence". Because of the influence of Bitcoin, every exchange has BTC trading exchanges. Because of the influence of Bitcoin, So anchoring occurs. The scope of influence is very broad
Including: Bitcoin’s special significance, consensus, popularity, market value ratio in the entire digital currency market, etc. The superposition of these factors has made Bitcoin the price trend vane of the currency circle. Having said that, the rise and fall of Bitcoin determines the direction of the entire currency circle. It is not absolute, but it is the case in most cases. For example, when Bitcoin falls, a certain If there is a sudden major benefit to a currency, this currency may not follow the rise, or if the market environment is not good and there is insufficient funds on the market, Bitcoin will rise sharply and have a blood-sucking effect, causing other currencies to have no inflow of funds. As a result, Bitcoin has risen alone, and no one else cares about other currencies. The specific situation requires specific judgment, but generally speaking, it is correct that Bitcoin controls the overall digital currency market trend.
