Bitcoin entered a new era: that of six figures. After several years, the laser eyes of the bitcoiners took effect and the digital currency created by Satoshi Nakamoto reached the long-awaited $100,000.
As usually happens, bitcoin drags many with its rise cryptocurrencies (altcoins) and this has not been the exception.
At the time of this publication, as seen on cryptoasset price trackers—for example CoinMarketCap or CoinGecko— More than a thousand digital assets are making profits on a daily, weekly and, in many cases, monthly level..
The following image, taken from CoinMarketCap, shows the 10 cryptocurrencies and tokens with the highest price increase in the last 7 days (considering only those 100 that have the highest market capitalization).
10 cryptocurrencies and tokens with the highest weekly rise. Source: CoinMarketCap.
As seen in the image, Curve DAO Token (CRV) leads the rise. The growth of its ecosystem, which includes an interest-paying stablecoin, crvUSD, has greatly influenced the revaluation of this historic governance token.
It is followed by IOTA, which will have an important update in a couple of weeks. As CriptoNoticias has reported, its developers consider that it is the biggest update in the history of this Cryptocurrency.
One trend of this rise is that old cryptocurrencies («dinosaur cryptocurrencies«, in the words of analyst Marija Matic) have taken the lead. CRV, IOTA and others like XRP, HBAR and TRX They have begun to stand out, after spending years “in the shadows.”
Why are cryptocurrencies soaring after the rise of bitcoin?
This phenomenon is explained by several intertwined factors that go beyond mere price correlation.
When BTC reaches new peaks, generates contagious optimism in the digital asset ecosystem. This climate of enthusiasm awakens the “Fear Of Missing Out” or FOMO among investorswho, seeing the benefits of Bitcoin, are rushing to look for similar opportunities in cryptocurrencies. The hope of replicating those returns leads to an increase in demand and, therefore, the price of altcoins.
Additionally, bitcoin acts as a liquidity reservoir. When its value grows, the capital available to be invested in cryptocurrencies expands. Investors, in their quest to diversify and maximize their profits, tend to move part of their profits towards altcoins, thus increasing their price.
However, this upward momentum in altcoins does not necessarily ensure a sustained trend over time. Volatility is inherent to the world of cryptocurrencies, especially for altcoins. Many of them, with low market capitalizations and liquidity, can experience drastic fluctuations with relatively little movement in the larger market.
If BTC experiences a plateau or worse, a crash, altcoins tend to be the first to suffer. The speculation that fuels its rise can fade as quickly as it arrived, leading to abrupt disinvestment that plummets its prices. The lack of institutional adoption and lower liquidity compared to bitcoin makes them even more vulnerable to these market fluctuations.
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