How Bitcoin Price $BTC Affects Other Currency Prices:
Bitcoin $BTC is considered the first and most popular digital currency in the market, as it represents the basis of the digital currency market, and therefore the change in Bitcoin price has a significant and direct impact on the performance of other currencies, so it is important for traders to constantly monitor Bitcoin movement and understand its impact on other assets to avoid risks and take advantage of investment opportunities.
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The relationship between Bitcoin and other currencies is represented by several factors, including:
1- Psychological impact:
Bitcoin is the primary indicator of the market. When the price of Bitcoin rises, general confidence in the market increases, which prompts investors to invest in other currencies (Altcoins). As for when its price falls, anxiety prevails, and this may lead to capital flight from the market entirely.
2- Liquidity:
Bitcoin is the most liquid among digital currencies, as when Bitcoin prices move up or down, other currencies follow as a result of major shifts in trading volume and liquidity.
3- Pairs Trading:
Many digital currencies are traded in pairs with Bitcoin on trading platforms, so a change in the price of Bitcoin directly leads to a change in the values of these pairs.
The image below shows a heat map showing the decline in the prices of all digital currencies as soon as the price of Bitcoin fell during the past 24 hours:
