The relationship between Bitcoin and altcoins is a crucial factor in the cryptocurrency market, with Bitcoin often leading the pack. Bitcoin’s aspect as a sound money is easy to comprehend and its accounting is enforced by computing power through a proof-of-work algorithm. This creates a connection between the digital and physical realms, establishing Bitcoin as the market benchmark linked to the physicality of energy and hardware.
In uncertain times, altcoin capital tends to move towards Bitcoin as a safer asset, but if too much spills over, the entire crypto market can suffer. The Federal Reserve’s actions, such as printing money and raising interest rates, can also impact the crypto market. Memecoins have dominated the market, with AI tokens surpassing their performance in early 2024.
The “old guard” altcoins focused on blockchain infrastructure and decentralized finance, but the 2022 crypto crash left emotional scars. The market shifted towards hype-driven gambling through memecoins. The approval of Bitcoin ETFs and the 4th halving set the stage for recent all-time highs. The altcoin market is now aligning with Bitcoin again, and older altcoins are returning to a more favorable climate.
The crypto market may deepen its liquidity pool, and the ruling against the sanction of Tornado Cash may have far-reaching implications.
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