📉 The Domino Effect: How Does Bitcoin's Decline Affect Other Cryptocurrencies? Key Examples!
When Bitcoin sneezes, other cryptocurrencies (altcoins) catch a cold! This golden rule in the crypto market summarizes the "domino effect" that links the fate of most currencies to the short-term performance of their parent currency. Here are the details, with real-life examples:
🌪 Why do Altcoins crash when Bitcoin declines?
1. Market dependency: 70% of Altcoins trades are against Bitcoin (BTC pair).
2. Investor Psychology: Bitcoin is a "confidence indicator" in the market. Its collapse triggers a wave of fear (FUD).
3. Leveraged Trading: A decline in BTC leads to liquidation of leveraged traders' positions, which puts pressure on liquidity.
4. Capital cycle: Investors sell Altcoins to buy discounted Bitcoin or switch to stablecoins.
🚨 Shocking examples: Currencies strongly affected by Bitcoin's decline
1. Ethereum (ETH) 💎 $ETH
- Reason: The second currency in the market, closely related to the movement of BTC.
- Recent example: In May 2024, ETH fell 22% within 48 hours after Bitcoin broke the $60,000 level.
2. Solana (SOL$SOL ) ⚡
- Reason: High-risk currency, experiencing sharp fluctuations with any negative signal.
Example: After BTC fell to $83,000 in June 2024, SOL fell by 30%, while Bitcoin fell by only 8%!
3. Dogecoin (DOGE) 🐕
- Reason: The meme coin is based on speculation and is considered the most fragile in the market.
- Historical example: In 2022, DOGE fell 60% in one week after BTC fell 25%.
4. Avalanche (AVAX) ❄️
Reason: A competitor in the smart contract space, affected by "big wallet" movements.
- Indicator: In April 2024, AVAX lost 40% of its value after capital outflows from Bitcoin.
5. Chainlink (LINK) 🔗
- Reason: Oracle-linked coin, reacts to overall market fluctuations.
Example: During the BTC correction in March 2024, LINK fell by 35% despite positive news about new partnerships.
🛡 How to protect yourself? Smart tips
- Track BTC in real-time: Use platforms like TradingView to monitor support and resistance levels.
- Portfolio diversification: Don't put all your eggs in the Altcoins basket!
- Stop-Loss orders: necessary to protect positions in highly volatile currencies such as SOL or DOGE.
- Panic buying: Some altcoins offer significant discounts during strong corrections (e.g., buying ETH at $3,000).
📈 What if Bitcoin goes up? Which currencies will win?
Ideal scenario: If BTC exceeds $86,000, bullish altcoins like TON or RNDR may experience fierce speculation.
- The golden rule: first BTC, second ETH, third Altcoins!
🚨 Reminder: The market is unforgiving! Even seemingly "safe" coins like ETH or BNB can lose 50% in any correction. The only effective strategy is risk management. #BinanceAlphaAlert
📌 Have you ever suffered losses due to the domino effect? Share your experience in the comments!
