Can someone explain - how/why BTC affect on ADA

Hi there, New to all this and in my sixties so will take time to grasp all the fundamentals, What causes the price on all crypto to drop over the period of a few days now and again. I can understand maybe a handful drop in value, but when its the lot I’m not really understanding. Is it due to when bitcoin falls the rest follow suit ? Not that it bothers me as I’m in for the long haul, things tend to go back to normal after a few days. Would just like to understand why this happens to all crypto at the same time.

Cheers Dave

Hi @dave5perth,

When bitcoin falls in many cases most alt-coins fall too. What I am going to say is not a science but more of a general rule of thumb.
Bitcoin is like dollar is to oil and many other products. We say that the dollar is the “reserve currency” of the world. This is because the dollar (we may question how long this will last :slight_smile: ) currently is the most powerful currency on earth.
The same narrative applies to crypto currency. Bitcoin is the first and the most “powerful” crypto currency and is in that sense the “reserve currency” of the crypto market.
When you look at the price of an altcoin in dollars, you are indirectly looking at the price of that alt coin in relation to the exchange rate of bitcoin with USD.
So since most alt-coins are traded heavily against and somewhat related to bitcoin, when bitcoin prices in USD fall most alt-coins who are prices in bitcoin will also follow.

Now there are also situations when bitcoin holders move bitcoin into some altcoins, this is when we see some alt coins rise while bitcoin falls. We saw that last Wednesday where bitcoin was falling but ADA was surging. Some argued that this was because bitcoin’s energy issues were addressed by Elon Musk, what might have caused some bitcoin positions to be sold and converted into the much environmentally friendly altcoin.

To conclude, in our global economy, once every about 70 years a new currency/country becomes the most powerful. This is when the reserve currency position will change. In the 18e century the Gulden was the most powerful (reserve) currency (the age of the powerfull Dutch empire). Later on the brittish empire overtook the dutch and the Pound became the world currency. Because of the 2nd world war, England lost a lot of power and the USA and the dollar took over. So maybe in 10 years the Yuan is the world reserve currency and is ADA the crypto reserve currency :smiley:


btw, if you specify the title of the topic probably it will get more attention

Im new to thee crypto world and after what happened over the last weeks Im not convinced this has anything to do with bitcoin price the drop in prices on all crypto at same time. It has to be the big institutions pulling out at the same time for profits. Every crypto down at the same time, then all crypto goes back to a reasonable level all at the same time, with the institutions getting in again at the lower prices, allowing this to happen again in the future with them being in at the lower end again. Prices will more than likely stay like this for awhile as many will be thinking pointless buying now, may happen again, will wait for the drop. I may have believed bitcoin price drove this if a handful of crypto fell, but everything at the same time, and all up together at the same time to a reasonable level then stops.

Why do you think the institutions are selling? What are you basing that on? I think it is the other way around. Retail investors mainly buy AND sell based on hype and twitter messages. And I actually understand that, since understanding the actual fundamentals of crypto and the underlaying economical logics is hard. Institutions and veteran crypto whales on the other hand do understand these fundamentals. I think that the institutions and big experienced crypto whales are buying up the dips created by the retail seller panicking.

And regarding why everything falls when bitcoin falls, I tried to explain that above and also here:

Ada4good, You will know a lot more about crypto than me, as I’m new to all this. I just feel there are a group rich elite playing with these markets, getting in low allowing markets to increase trickle sell then bang every crypto down at same time causing havoc, people under pressure selling thinking it could go lower, then they are back in at the low end again as all crypto goes up at the same time back to something reasonable. They are back in at the low end knowing they could do this again at anytime in future just for profits. Cardano had been the same price for months very seldom moving the most stable crypto out there, then we had the surge then collapse to where it had been for months. Just find it extremely strange why every crypto goes down at same time and they all come back up at the same time to a reasonable price. I could be totally wrong here, but things don’t add up for me as regards this is just caused by bitcoin and a few tweets.

Why would anyone who has ada sell if bitcoin crashes, surely the assumption would be the sellers of bitcoin would invest in something else, this didn’t happen. Every crypto all collapsed at same time and increased at the same time to reasonable levels again. Once Cardano gets the adoption worldwide should be untouchable from the money men.

Because a lot of people are in it for the short term and also significant number of people are in it because they speculate not because they believe or even understand the greatness of cardano. Not everybody is a long term fundamental holder of ADA. And the thing is, not everybody has to sell for the price to decline. When some people sell and there are not enough buyers in the order book then the price will fall. So all that is needed for prices to fall is to have some people selling and not enough people willing to buy at that current price. That is why prices of ADA have little to do with the fundamentally great aspects of the project itself. If the hodlers believing in the project hold but not buy the dip enough, still the price will fall… It’s that simple. And since quite a lot of people believe that when bitcoin (the current flagship of crypto) falls that is a bad sign for the whole industry, then they will also sell their alts.

That is an assumption indeed. And not always a correct one. If the general sentiment of the whole crypto market is bearish then people might just want to convert most of their crypto into USDT and wait until they feel its ok to buy again.
Again, holding ada will not increase the price of Ada! this is a misconception.

I can tell you this though:
I bought the dip :smile:

You must have been one of the lucky ones to buy the dip, I tried on kraken exchange and something happened which didn’t allow me to buy the dip, even though the transaction was in motion. So didn’t get to buy the dip, money had been taken out my account which is still pending that’s after about 5 days although we had the weekend, hopefully this is back in my account in next few days. Many were having trouble around the world with trying to buy, with banks stating it could be hacking accounts so not allowing transactions to happen. Well done for topping up at the lower prices, the Cardano project looks the business, doing all the right things. Hopefully the penny drops for the many.

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Yes, a lot of the big central exchanges where down! Even Coinbase was down! This is another testament that centralized doesnt work. And guess which exchanges were not down. Yes, the big decentralized Exchanges were all up without any problem.
I was lucky to be able to access coinbase via the iphone app, where the desktop app didnt work.

I wish you and all Cardano holders all the best! In the end, crypto will win from fiat and cardano will be one of the kings within the crypto realm.

ADA4Good, You seem to know bit about crypto, which exchange can you buy Ergo? had a look on a few and aint able to find it.

Given DEX or protocols, like Uniswap, are mainly a set of smart contracts, for them to be down you would need for the underlying blockchain to be down :no_mouth:.

I am using Coinex

You may have a look at CoinMarketCap website.

Edit: same link as before, just made more visible it’s pertaining to Ergo, following @ADA4Good lead :no_mouth:

Here you can see your options:

True. I do remember 2019 when there also where some dex’s. But performance was horrible. We have come a long way. And just wait until the first dex’s will be launched on cardano!

Thr the future is decentral.

Yes, there are such projects on Catalyst. They won’t be in production before Goguen era though.