1. **Main Market Indicator**: Bitcoin is the most prominent indicator of investor confidence in cryptocurrencies; its rise increases optimism, while its decline raises fears of a market downturn.
2. **Impact on Altcoins**: Smaller currencies often follow the trend of Bitcoin, as its rise attracts new investments, while its collapse causes a mass exodus from them.
3. **Market Liquidity**: When Bitcoin rises, liquidity increases in the market as a whole, while its sharp decline may lead to freezing investments and reducing trading volumes.
4. **Investment Sentiment**: Bitcoin is a “risk gauge”; its rise encourages speculation, while its decline encourages hedging with stablecoins such as **Tether**.
5. **Correlation with Traditional Markets**: Recently, Bitcoin has become partially correlated with markets such as stocks (such as Nasdaq), and its volatility may affect the fintech sectors.
6. **Impact on mining**: A falling Bitcoin price reduces miners’ profits, which may reduce their participation in the network and affect the security of the blockchain.
7. **Regulations**: Sharp volatility prompts governments to increase oversight, which may limit market growth or enhance legitimacy when it stabilizes.
8. **Institutional investment**: A rising Bitcoin attracts large investment funds, while a falling Bitcoin increases selling pressure, especially in light of the adoption of “ETFs” and others.