Why does the rise of Bitcoin trigger a frenzy in other currencies?

In the world of cryptocurrencies, Bitcoin is undoubtedly the most eye-catching star. Since its launch in 2009, its price has experienced several fluctuations, sometimes soaring and sometimes plummeting. However, in recent years, the upward trend of Bitcoin has become more and more obvious, especially between 2020 and 2021, when its price once broke through the historical high. This phenomenon not only attracted the attention of investors, but also triggered other cryptocurrencies to follow suit. So why does the rise of Bitcoin drive other currencies? This question deserves in-depth discussion.

First of all, as the "top of the pyramid" of cryptocurrencies, the impact of Bitcoin's price fluctuations on market sentiment cannot be underestimated. When many investors see the price of Bitcoin rising, they tend to "follow the trend" and think that other currencies will rise accordingly. This psychological phenomenon is not uncommon in the financial market and is called the "herd effect." For example, in May 2021, the price of Bitcoin once exceeded $65,000, followed by the prices of other mainstream cryptocurrencies such as Ethereum and Litecoin. At this time, investors often unconsciously turn their attention to those potential stocks, expecting to get rich returns driven by Bitcoin.

Furthermore, the rise of Bitcoin has also brought great attention from the media. As the price of Bitcoin continues to rise, major media outlets have reported related information, which in turn attracted more investors to enter the market. This media effect has also contributed to the rise of other cryptocurrencies to some extent. For example, during the period when the price of Bitcoin broke through $60,000, media coverage of cryptocurrencies reached an almost unprecedented level. This attention not only increased the public's awareness of cryptocurrencies, but also stimulated more people's enthusiasm for investment, causing the prices of other currencies to rise.

In addition, the rise of Bitcoin has also driven the popularity and application of blockchain technology. With the success of Bitcoin, more and more projects have begun to explore the potential of blockchain technology, and these projects are often accompanied by the launch of new cryptocurrencies. When the price of Bitcoin rises, investors' attention to emerging projects also increases, which in turn drives the development of the entire industry. For example, the rise of decentralized finance (DeFi) projects is precisely due to the market boom driven by Bitcoin. While seeing the rise in Bitcoin prices, many investors also hope to get higher returns by participating in DeFi projects.

Furthermore, from the perspective of technical analysis, the rise of Bitcoin often affects the price trend of other currencies. Many traders will formulate trading strategies based on the price fluctuations of Bitcoin, and this strategy often forms a consensus in the market. For example, when the price of Bitcoin rises, many traders will choose to buy other mainstream currencies at the same time, hoping that other currencies can also gain corresponding benefits while Bitcoin rises. This trading behavior will not only lead to the price increase of other currencies, but also further increase the volatility of the market.

Of course, in addition to the above factors, the supply and demand relationship in the market is also an important factor affecting the price of cryptocurrency. When the price of Bitcoin rises, many investors will increase their investment in other currencies in order to gain more benefits in the market boom. This increase in demand will inevitably drive up the prices of other currencies. For example, during the period when the price of Bitcoin exceeded $60,000, many investors flocked to the Ethereum market, causing the price of Ethereum to soar in a short period of time, even breaking through $4,000 at one point.

However, it is worth noting that the cryptocurrency market is extremely volatile, and investors often face huge risks while chasing the rise of Bitcoin. Due to the lack of market regulation, the price fluctuations of many currencies are often affected by market sentiment, and investors need to be cautious. For example, when the price of Bitcoin falls sharply, many investors who follow the trend may suffer heavy losses. Therefore, when participating in cryptocurrency investment, investors should remain rational and fully understand the market risks.

In the long run, the rise of Bitcoin will play an important role in promoting the development of the entire cryptocurrency market. As Bitcoin continues to gain popularity, more and more people are paying attention to cryptocurrencies, which undoubtedly provides opportunities for the development of other currencies. At the same time, the maturity of the market will also prompt more projects to emerge, promoting innovation and development of the entire industry.

In general, the rise of Bitcoin has a multi-faceted impact on other currencies, including the impact of market sentiment, capital flow, media attention, technology applications and other factors. As investors, we should not only pay attention to the trend of Bitcoin, but also rationally analyze market changes in order to find our own investment opportunities in this field full of opportunities and challenges. I hope that every investor can grasp the pulse of the cryptocurrency market under the guidance of Bitcoin and realize their own wealth dreams in this rapidly developing industry.

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According to market data, Bitcoin rose in a short period of time, breaking through $16,100 and now at $16,099.11, with a daily increase of 0.95%. Such data has aroused investors' strong interest in the digital currency market. At this time, careful investors will find that some digital currencies will change with the changes of Bitcoin. For this situation, I believe most investors will wonder, then, why will the rise of Bitcoin drive many other currencies? The following editor of Coin Circle will give you a comprehensive analysis of why the rise of Bitcoin will drive many other currencies?
 Why will the rise of Bitcoin drive up the growth of many other currencies?
On the one hand, Bitcoin has a large market value and good liquidity, so it can stand firm. On the other hand, the market is short of money.
It is normal for funds to huddle together for warmth in a weak market, and this behavior often occurs in the stock market.
At present, there is no logic to support the bull market from the perspective of funds, because everyone is short of money. The upper ones are stuck, and the lower ones are unwilling to sell at a loss. At this point, the dealer repeatedly changes chips. The main force will complete the operation process of selling high and buying low in the ups and downs of market sentiment. For example:
In the topic of ETF events at the end of July, BTC was the only one that led the rise in the market. Many traders will find that BTC did rise rapidly at the end of July. However, if they hold non-Bitcoin assets, most investors did not make money.
Previously, we watched Bitcoin go from $6,300 on July 15 to $8,500 on July 30 in just half a month. The entire market is watching this elephant dancing. According to the previous logic, Bitcoin will set the stage, and then small currencies will go wild.
However, there was no compensatory rise, but instead the air force went to work.
Due to the game of existing funds in the market, the funds outside the market did not enter the market. Investors with funds in the market are not willing to buy altcoins. At the same time, the price of 8,500 US dollars is considered overestimated. This shows that in the current market, altcoins are not recognized by everyone.
There are huge locked-in shares standing guard above, and outside funds are unwilling to enter the market, resulting in a market - without money.
 Reasons why Bitcoin will rise in 2020
1. Global economic downturn
The public's insistence on safe havens in 2020 has been unable to avoid the epidemic. As the epidemic has developed to this point, the turmoil in the United States is difficult to end. The United States has also exposed the bloodiness of capital in the face of the epidemic, so the world has lost confidence in the US dollar.
As soon as we saw the situation in the United States, we wondered whether it would be stable or not. Americans thought so too. They began to worry that the dollar could not maintain its value. They had to find something that could maintain its value, so Bitcoin appeared. In the United States, banks have limited cash withdrawals to $3,000. The biggest advantage of Bitcoin is that it is not controlled by the state or organizations, so it is very appropriate to choose Bitcoin as a safe haven.
2. Bitcoin issuance is small
As funds flow in, the price will rise. We all know that the total issuance of Bitcoin is 21 million, and there are only a few million circulating in the market. If we calculate based on 10 million coins, the current price is about 9500, and the total value is only 95 billion. Even if all 21 million coins are counted, it is only about 200 billion, which seems to be a lot of RMB.
According to statistics in 2019, there were 20 million blockchain users. It is unknown how many more will be added this year. 20 million people can support such a large market. Not to mention a lot, the number of people will double in 3-5 years, and the number of bitcoins will remain unchanged. We all want it, so what can we do? The price must go up. This does not have to wait for 3-5 years. Bitcoin is a global participation. Five years ago, if you asked a hundred people around you, almost no one knew about Bitcoin. Now if you ask people around you, at least 2.30 out of a hundred people know about it. The user growth is very scary. This does not include the overseas scope. Before, Bitcoin was basically a computing power game for Chinese people. This year, the situation is turbulent, and more people have a need for hedging. Foreign capital has entered the market, and the market is volatile and price increases are inevitable.
This year, the price of Bitcoin has been halved, production has decreased, and mining costs have increased. Based on these factors, miners will inevitably raise prices. In addition, there is demand for financial equipment from foreign capital and the need for risk hedging. The hedging function of Bitcoin has become increasingly important.
3. The value of Bitcoin is determined by market capital
In the eyes of those who oppose Bitcoin, Bitcoin is a product of a string of codes, meaningless and worthless, and the price is just hyped up, or even a trap, and someone will always take it and break it. In practical terms, Bitcoin is indeed worthless. It is not the product of any country or any enterprise, and Satoshi Nakamoto has not endorsed it to say what it can do. Even its high price can be said to be magical.
In the end, what is the value of Bitcoin? It really has no value. It is meaningless to give Bitcoin to someone who doesn't know it. But we are willing to accept such a high price for it. There must be a deep reason. As we all know, Bitcoin originated abroad. It was only after it spread to China that we smart Chinese people played with it in a variety of ways, so there was a 17-year bull market. My biggest feeling is that Bitcoin has no value, but we have given it value.
We often talk about digital gold. Gold originally had no value. To primitive people, it was just a stone. It’s just that we all say that gold has value. We can all use gold to buy things. One gram of gold is equal to so much rice, so much supplies, so gold has value.
Through the above introduction, I believe everyone has understood why the rise of Bitcoin will drive up the rise of many currencies. The editor of the currency circle would like to remind investors that no matter which digital currency you choose to invest in, even if it is Bitcoin, before investing in a digital currency, you must first go to the official website to read the white paper to see if it is logical and whether there is a future trend, and make a comprehensive judgment based on current news and actual actions.

Secondly, the rise of Bitcoin is often accompanied by the overall prosperity of the market. When the price of Bitcoin rises, it often means that more funds flow into the cryptocurrency market. This inflow of funds not only increases the market value of Bitcoin, but also provides more liquidity for other currencies. For example, from the end of 2020 to the beginning of 2021, as the price of Bitcoin soared, the total market value of the entire crypto market also increased. At this time, many emerging currencies such as Dogecoin and Shiba Inu Coin have gained market attention, attracted a large number of investors, and then pushed up their prices.