So I am a newbie and I always had this question in my mind why all altcoins are backed with BTC because at times like these altcoins are the most affected one there are some really great altcoins out there but due to this correction we can see a massive drop in those coins and I don't think it is fair to other coins that because of only one single coin they also see a massive drop.
I am saying again I am just a newbie who is trying to understand these market.
Thank you
There are certain reasons that why altcoins follow the Bitcoin rally which you need to understand:
- Bitcoin was first decentralised currency of its type built on POW mechanism and network is secured my miners so investors have faith on Bitcoin and want to invest in it on top basis.So whenever Bitcoin prices fall investors cash out from other alts also.
- Bitcoin is easily traded pair for BTC/USD and most of the exchanges don't allow for direct altcoin buying and you first have to convert your funds into Bitcoin and then exchange it for your prefered altcoins so it is directly related to price.
- There are many in market which are hard fork of Bitcoin like Bitcoin Cash and their price is relative to its growth somehow.
- Most Exchanges use Bitcoin as reserve currency as it is easily acceptable and most preferred Cryptocurrency so they maintain reserve with respect to altcoins also so whenever there is price dips it affect altcoin rally.