Why Altcoins Are Dropping?

Altcoins can be defined as a different type of cryptocurrencies other than bitcoin. This includes- cryptocurrencies based on mining, stable-coins, security tokens, utility tokens, etc. The word ‘Alternative’ and ‘Coins’ (Cryptocurrency) are joined together to form the term. The estimated number of cryptocurrencies released in the market to date is approximately around 5000. These Altcoins have acquired around 34% market share of the global Cryptocurrency market. In terms of market value, Ethereum & Ripple are the largest Alt-coin in this market.

With the huge market spread, once it was thought that Altcoins will grow even faster than Bitcoins. But now, it has actually turned the other way round. In this article, we will discuss the top reasons behind the downfall of Altcoins.

Primary Reasons for Altcoin value drop:

1) Non-Approval of Bitcoin ETFs:

Securities and Exchange Commission (SEC) rejected proposals from different Bitcoin Exchange-Traded Funds (Bitcoin ETFs) for possible chances of manipulations in buying & selling cryptocurrencies. Though this refusal was meant for Bitcoins, it left the adverse effects on other cryptocurrencies as well, including Altcoins. Well, this digital system works in a strange manner where if Bitcoin’s market cap falls down or happens the other way round, the rest also starts flowing in that trend. So, where SEC’s denial dropped Bitcoin’s value from $6400 to $6200, Altcoins’ value dropped to the amount as low as $220.

So, considering the higher market value and demand for Bitcoins, even though they survived this tumbling situation, Altcoins could not!

2) The popularity of Bitcoin(BTC) :

Altcoins do have the prospect to grow and prove beneficial to the investors but it is always get dimmed in front of the popularity of Bitcoin. For millions of people, who don’t know about the cryptocurrency concept in detail, can’t discriminate against the concept of cryptocurrency & Bitcoin. For them, both are the same.

So, when an investor will want to save his hard-earned money from the govt taxation policies and inflation, they will tend to invest in bitcoin, not in Altcoins. They are aware of the fact that if the government collapse by any chance their Bitcoin investment can save them.

3) Value of Altcoin is less:

The investors of Altcoin are mostly those people who won’t be able to buy Bitcoin for being higher in value. If Bitcoin suffers downtrend, then the value will surely be lesser; but being high-valued the percentage degrowth will not be huge. On the other hand, a similar downtrend can be fatal for an Altcoin. As the value is very low, the downtrend will bring non-coverable losses to the investors. Thus the investor will immediately sell their Altcoin units.

The below illustration will make things clearer to you:

CRYPTOCURRENCY Past Value 50% degrowth Current Value
ALTCOIN $10 Less-$5 $5
BITCOIN $3000 Less-$1500 $1500

Well, to be precise, the entire cryptocurrency market is struggling with this value-drop. However, investors need to research thoroughly before opting for this digital currency. Because let’s be logical, who would be happy to face a loss after investing their pennies!!