Why are alternative cryptocurrencies dropping while bitcoin is rising?

It is one of the important and frequently asked questions every time Bitcoin rises leaving altcoins behind in a red sea.

I participated Cryptocurrency trading platform Binance recently posted on its official blog, looking for the answer to this question and also touching on how there is a sharp distinction between the bitcoin and altcoin markets.

The total market capitalization of the cryptocurrency market has reached the level of $400 billion, with most of this value coming from the value of Bitcoin (BTC).

Bitcoin price surged ahead of the US presidential election, reaching $13,500 at the time of writing.

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While Bitcoin investors were watching this rally with interest, altcoin investors couldn’t enjoy it.

Bitcoin was the only one to rise and its dominance, which was at 55%, rose to 63.5%.

Bitcoin has almost suppressed the altcoin market.

Comparing what is happening with bitcoin and altcoins with traditional markets:

Although Binance did not delve into the reasoning behind the difference between Bitcoin and altcoins, it did examine why the gap between the two is widening.

Binance noted that with the rise in the price of Bitcoin, the number of investors who want to buy Bitcoin and make money from its rise increases, which means increased pressure on altcoins.

Binance provided an example from traditional markets and noted the relationship between the US dollar and other currencies, and gave the following example to illustrate:

Suppose the US dollar is rising in value strongly.

If you want to make money from a rising dollar, you will need to sell your local currency and buy dollars.

But let’s imagine that everyone wants to earn a dollar and everyone does the same.

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This will affect both the local currency and the dollar.

A strengthening or weakening of the dollar in traditional markets causes currencies such as the euro, the Australian dollar and the Canadian dollar to move in the opposite direction.

The same is true for the cryptocurrency market.

The increased demand for bitcoin also affects the altcoin market.

Increased feelings of FOMO:

According to research conducted by Binance, investors do not want to be left behind in the continuous rise of Bitcoin, they want to get a share of the returns that Bitcoin provides.

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This was seen as a reflection of greed in the market as well as creating a certain effect of fear of missing out (FOMO) and the rise of Bitcoin.

The impact of FOMO in the market is getting more intense, the Binance team says that altcoin investors are starting to switch to Bitcoin and that is why the gap between these two markets is opening and growing.

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