EMLI5: Why is the price of ADA (and many other alts) so tightly connected to the price of BTC?

I’m trying to understand how the crypto market works, and especially why the price of many alt coins like ada move along with BTC.

I’ve heard several explanations. But none of them really explain it fully/logically.

  • Most read answer: BTC is the biggest asset of all crypto’s for many exchanges. Therefore all alts are measured with BTC. I do not fully understand this answer. How does this work? For example how was the price determined for 1 ada, back when it was launched? What is the role of the exchange here?

It somehow concerns me. If BTC drops, ada drops. If BTC pumps, ada pumps.

Does this mean if BTC turns out to be a unsustainable venture to mine, loses 80 of the value, ADA will also go down deeply?

This brings me the following question: can alts/ada exist without BTC?

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Hi there!

Even the most renowned crypto experts don’t fully understand how this market works… As Charles Hoskinson would say: “this is a game you can’t win”. That’s why investing in cryptos linked to excellent tech projects like ADA matters!

I’m far from being an expert but I can give you my understanding of the current situation:
I think that we might be entering a new era where btc will stop being a benchmark for alts and will remain a store of value at a more or less stable price (I saw some predictions around 15k), like a digital gold.
I also think this new period will do a major clean-up among the alts. I always joke around saying we aren’t supporting soccer teams because of the quantity of different alts growing more and more, and I think this might be the time where techless projects will fade away.

Sorry I can’t answer all of your questions, but I really think that a project with excellent technology like Cardano can exist without being correlated to btc price.

I’ll be curious to read more opinions on the subject!

But the most certain thing to acknowledge is that we don’t know what is gonna happen in the next months and that we cannot rely on the past to explain it :grin:

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Hi @cheizer,

Firstly there was a comparable post and my reply below:

Mostly this is true mainly because of the above and also the below:

for now, btc represents crypto. I say this from a world view not from a cardano enthousiast view. For now when 95% (just a estimated guess to make a point) of the world thinks about crypto they think bitcoin. The majority doesn’t even know what cardano is. Also for the same reason, most institutional money is into bitcoin not into cardano (yet). So when there is fear and bad news regarding bitcoin the general world view will be that not bitcoin but crypto is in trouble. In other words, since bitcoin is the most important for now and it might go down and get into trouble, why would alts not be in trouble? Since most alt investors are also aware of this, to preserve their investment they will also sell their alts. To summarize, in trading it is not about who is actually right but about what the majority thinks is right.

I think that the day an alt will have twice the market cap of bitcoin that the world view will change and for then that altcoin is the new representative of the crypto space. We all know that cardano will be taking that spot someday :grinning_face_with_smiling_eyes: