Why are Altcoins falling faster than Bitcoin?
May 19, 2022 (Investorideas.com Newswire) It's a growing controversy in the market; some say it's because Bitcoin is far more trusted, while others have their own theories. Regardless of the reasoning, many Altcoins are hitting a new low. The question is: why?
One simple explanation may be that Bitcoin has been garnering more and more trust for the past few years. How many times have you heard someone say, "I'm a firm believer in Bitcoin and think it will be the only digital currency that exists in 5 years." Comparatively, how many times have you heard people say they believe in a specific Altcoin? In other words, Bitcoin is becoming a "safe haven" of sorts.
When investors are nervous or the market becomes rocky, they will typically look to safe havens to store their wealth-this is one reason gold has always been valued as a storehouse of wealth by most people all over the world.
Why are Altcoin Prices going down?
This is a question that has been plaguing me since the beginning of this year. I've heard various explanations, but I find there to be these major reasons why Altcoin prices have been falling:
1) The massive amount of capital that has flooded into the market (fueled by ICOs) has created a bubble.
For those unaware, an ICO is essentially a crowdfunding campaign for new ventures which uses cryptocurrency as their main currency. At least 80% of all ICOs today are used to fund new projects. In many ways, these "Crowdfunding campaigns" have become the "new norm" in the Cryptocurrency market. In many cases, people are essentially putting their money into a risky venture with the hopes that they will either receive profits or a return on their investment at some point in the future. Aside from Bitcoin, which has grown significantly in size and value over the past couple of years, cryptocurrencies have been largely financed the same way: through ICOs.
As you may have guessed, this has created an extremely volatile environment and has led to much uncertainty for potential investors. This is because these new investors are relatively unknown; many people don't even know who is behind these projects or if they are even legitimate ventures at all.
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I'm sure this is something we will see a lot in the coming months-the amount of Altcoin projects that have been created recently tends to outweigh the number of actual quality projects out there (which could lead to further uncertainty among investors). Furthermore, I would wager that those who are most likely to invest in such new ventures are people who are willing to take big risks.
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