In the digital currency market, the price gap of altcoins exceeds that of Bitcoin, which has attracted widespread attention and heated discussions. What does this phenomenon mean? Let's take a deep look at this eye-catching phenomenon.

New Trends in the Digital Currency Market

The digital currency market has always been a field full of variables and fierce competition. Recently, people have begun to focus on some lower-priced and smaller-market-cap altcoins instead of mainstream digital currencies such as Bitcoin. As the price of altcoins exceeds that of Bitcoin, the market structure seems to be quietly changing.

The Rise of Altcoins

As a new force in the digital currency market, altcoins have always been controversial. However, the prices of some altcoins have gradually risen recently, even exceeding well-known digital currencies such as Bitcoin. What kind of logic is hidden behind this phenomenon? Some analysts believe that the rise in the price of altcoins exceeding Bitcoin may mean that investors have adjusted their risk preferences and investment strategies.

Volatility of Market Sentiment

The digital currency market has always been volatile, and market sentiment plays a vital role in price fluctuations. When the price of altcoins exceeds that of Bitcoin, investor sentiment may fluctuate violently, the market changes rapidly, and predicting market trends has become a more complex challenge.

Changes in investor mentality

The price of altcoins surpassing Bitcoin may trigger changes in investor mentality. Some investors may turn more attention and funds to altcoins in search of higher returns. However, there are also views that the price volatility of altcoins is large, and the investment risk is also increased accordingly, and investors need to be cautious.

The impact of regulatory policies

With the continuous development and growth of the digital currency market, regulatory policies have also become an important factor affecting the market. When the price of altcoins surpasses Bitcoin, regulators may increase their supervision of the digital currency market to maintain market order and investor rights.

Future development trend outlook

Against the background of frequent price fluctuations in the digital currency market, the price of altcoins surpassing Bitcoin may only be a microcosm of market development. In the future, the digital currency market will face more challenges and opportunities. Investors need to remain vigilant, look at market changes rationally, and seize investment opportunities.

Conclusion

The price of altcoins has exceeded Bitcoin, which has attracted widespread attention from the market and investors. Behind this phenomenon lies the complexity and variability of the digital currency market. Investors need to be cautious, invest rationally, grasp the pulse of the market, and realize wealth appreciation. The digital currency market will continue to be an area full of challenges and opportunities. Let us wait and see, and witness the new changes in the digital currency market together!

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

What does the spread of altcoins over Bitcoin mean? It’s no secret that Bitcoin’s first-mover advantage has led to huge network effects. But what are the real advantages of these effects? Previously, we have published articles explaining that Bitcoin’s relatively low price volatility is a major advantage, but liquidity and slippage (slippage spread) are two other factors worth paying attention to.

Liquidity is a valid factor to measure whether people can quickly buy or sell an asset without causing drastic price changes. If an asset can be sold or exchanged for another good or service in a timely manner without causing much impact on the market price, then the asset can be considered a liquid asset.

Traditional fiat currency (in the form of cash) is the best example of extremely liquid assets, which can be used to directly purchase goods and services. In contrast, houses are illiquid assets because it may take months to find a buyer willing to purchase a house at the market price.

Slippage is generally a side effect of insufficient liquidity. Slippage is the difference between the expected price and the actual transaction price of an exchange at the current market exchange rate. For example, if someone wants to sell $1 million worth of a cryptocurrency on an exchange, if he wants to complete the transaction quickly, he may have to sell part of it at a price lower than the market price because there are simply not enough buyers at the latest transaction price.

Many cryptocurrencies can be easily transferred around the world in seconds, but most of them have extremely poor liquidity. As shown in the data from Cryptowatch above, Bitcoin is by far the most liquid cryptocurrency on the market - even more so if USDT is excluded.

Ethereum is the only non-stablecoin cryptocurrency other than Bitcoin with 8-digit liquidity. Among other cryptocurrencies, only Litecoin, Ripple, EOS and Bitcoin Cash have more than $5 million in Liquid Bids.

Liquid Bids is a metric set by Cryptowatch, which is the sum of all buy orders within 100 basis points of the best bid in the market tracked by the platform. Liquid Asks are the same concept. In other words, this data shows the number of pending orders for each currency on the order bar that are traded at a spread within 1% of the market price.

If you are trading cryptocurrencies and are watching the price of a particular crypto asset, you need to make sure that the currency has enough liquidity to ensure that you can exit at any time. Most crypto assets have poor liquidity, so it is not easy to exit without slippage.

Therefore, the difficulty in entering and exiting due to poor liquidity makes these altcoins difficult to use as a value storage tool. When you don't accept a high spread and there is no place to exchange your position, do you think you still hold the value of the currency?

This is not a theoretical question. In reality, the impact of slippage is reflected in various cryptocurrency-related financial services. In 2017, Elizabeth Rossiello, CEO of BitPesa, said that she had to be pragmatic when integrating new cryptocurrencies into the company. The company has been providing Bitcoin liquidity to individuals and institutions since 2003.

Rossiello
once said: “If you can tell me that everyone is using this coin, it’s super liquid, there’s no slippage, and you have brokers in six markets who can provide you with liquidity and give me a certain credit line or something like that—then I’ll do it.”

Slippage can also be directly reflected in the fees associated with various cryptocurrency services. For example, crypto lending platform Nexo
determines loan ratios based on the liquidity and price volatility of a particular asset. Users who deposit Bitcoin can borrow 52.7% of their deposit, while users who deposit Stellar can borrow 17% of their deposit. On the online financial platform Uphold, the transaction fees of niche altcoins such as BAT or Chainlink are more than twice that of Bitcoin. These are real-world examples of the advantages of Bitcoin’s network effect.