Observing the cryptocurrency market, we found that although most cryptocurrencies have price differences, most of them will fluctuate with the price trend of Bitcoin. When the price of Bitcoin increases, most other cryptocurrencies will also increase, and vice versa.
Is this trend due to large accounts operating on multiple exchanges or countless retail investors carrying price differences? Or is it caused by other operations?
It's hard to pinpoint all the interconnections, hopes and fears that drive financial related transactions but I distinctly remember right after Covid started. The stock market began to crash and Bitcoin went with it - so the effect is not limited to specific assets, or sub classes within those assets. However there definitely is correlation between cryptocurrencies for all sorts of motives - you've got whales involved, which might sometimes be hedgefunds trying to take profits when things look negative and you've got people who bought in but were hoping to see rises, then they get spooked at the large amount of volatility in the market - people are happy to see it go up 10% in a day, but might get spooked if it drops 3%. It's impossible to tie these things down to one reason, because there are millions of different motivations and requirements out there.