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Why isn't bitcoin growing at similar rates to altcoins?


en.cryptonomist.ch 09 September 2021 11:11, UTC
Reading time: ~4 m

In 2021, the price of many altcoins grew with higher, often much higher, percentages than the price bitcoin

Summary

Bitcoin vs Altcoins

Looking at the top ten crypto assets by market capitalization, excluding stablecoins of course, BTC has increased its value by 60% and ETH by 353% so far in 2021.

However, it is worth mentioning that the price rise of Bitcoin started earlier, i.e. in November last year, while for many altcoins it started later, i.e. in the first months of 2021, or even later. For example, Solana‘s powerful one only started in August. 

Therefore, it would be useful to compare the performance of the last 12 months, comparing the current prices with those of a year ago. 

But even in this case, many altcoins have performed better

The price of BTC has risen by 348% over the last few months, while the price of ETH has risen by 870%. 

Even better was Cardano (ADA), up +2,400%, while Binance Coin (BNB) was up +1,700%.

XRP with its +350% is on a par with Bitcoin’s rise, while Polkadot (DOT) is up +500%. 

The performances of Solana (SOL), +5,300%, and especially Dogecoin (DOGE), with a resounding +8,700% in one year, have been extraordinary, resulting in the cryptocurrencies with the highest gains in the last year among the top 10. 

Therefore, only BTC and XRP have performed less than 400%, while DOT and ETH have performed less than 1000%.

Furthermore, even among the smaller altcoins, in many cases there have been huge percentage gains over the last 12 months, although there are also some that have performed poorly, or even badly. 

Many altcoins have grown more than Bitcoin in terms of percentage

But why? 

The differences go back a long way. 

Apart from BTC, of these, only ETH and XRP had already experienced a resounding boom in 2017, while the others had never in their history experienced a boom comparable to those of BTC, ETH and XRP in 2017. 

For example, BNB’s real boom was only triggered at the beginning of 2021, followed by that of ADA. DOGE’s boom was generated in several phases, the last one in May, while SOL’s only came in August. 

Therefore, since BTC, ETH and XRP had already experienced dramatic increases in value in the past, this year’s growth rate was more modest, while the others experienced their first real boom in 2021. 

The post-halving years

Moreover, in the post-halving years, such as 2021 or 2017, there was a real alt season, with resounding performances of altcoins, but this was followed in 2018 with a real collapse that was far greater for altcoins than for Bitcoin. 

At the height of the speculative bubble in late 2017/early 2018, the price of BTC soared to $20,000, only to quickly fall back to $6,000. Within about 12 months it was back to $3,200, so the maximum loss one year after the peak was 84%. 

The price of ETH, on the other hand, went from $1,400 to $99, a loss of 92%, and XRP from $3.4 to $0.27, a loss of 92%, although it then fell again to $0.14, a loss of 95%. 

Thus, when the price of bitcoin started to rise again in late 2020, it started from higher levels than those reached by the altcoins that were the protagonists of the speculative bubble of late 2017. 

Conclusions

In other words, although the price of bitcoin is volatile, the price of altcoins very often is more so, especially that of the most successful altcoins. This means that they can generate greater gains in BTC during bullruns, but also greater losses during bearish periods, precisely because of even greater volatility than the price of Bitcoin. 

So on the one hand there is the fact that the price of Bitcoin, which had already experienced another boom in 2013, has already grown a lot in the past, and is now growing less in percentage terms, and on the other hand, the altcoins tend to still have a higher volatility. 

Finally, it is worth noting that excessive volatility often frightens institutional investors, and it is perhaps no coincidence that they are primarily interested in bitcoin in the crypto sector, and relatively little in altcoins. 


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