By There are a few reasons why Altcoins may not be recovering after the major correction while Bitcoin itself is. Bitcoin is the main and most well established of all cryptocurrencies. It has a market dominance of over 35%, and that number seems to have gone up closer to 40% after the recent correction in early February 2018.
The main reason for Bitcoin always leading the way in volatility is because it is usually the base currency of the entire cryptocurrency markets, similar to how the US dollar is the base pair to the fiat currency markets. When you want to check how a fiat is doing, you compare it to USD. When you want do the same in the cryptocurrency sector, you compare it to the BTC exchange rates. This means that, oftentimes, BTC is the market maker in the sector and most other Alts will follow it during both bear and bull trending markets.
Getting back to your question, here are a couple of reasons why the alts you are following may not be recovering as quickly:
They Are Still in Development
The first and most likely reason for certain alts being slower to recover is that many alts are still very early in their developmental stages. Unlike Bitcoin, which is well established, some altcoins have no mainnet, no working product, and their value is very speculative. When over-speculation occurs and causes a huge correction, as we just witnessed, the markets take their time in re-evaluating projects. This is a means of ensuring that the speculation into those types of assets don’t get away from an investor or the markets, bringing on the need for another correction.
Low Investor Confidence
Another reason that may cause alts to recover at a much slower rate is simply due to investor confidence. After a major correction or crash, investors are weary and less likely to return capital to smaller emerging assets. Similar situations happen in the stock markets; when a major correction happens, investors tend to go into more blue-chip and established assets first. They will slowly make their way into smaller assets; however, they need to build back a little bit of the confidence they lost during the recent correction. Investors putting their money in Bitcoin is the equivalent to stock investors moving their money into blue chips in events of high volatility.
The Capital Goes to Bitcoin, First
A final reason could be that Bitcoin was where a lot of investors have pooled their money for reimbursement throughout the sector. As Bitcoin is the general entry and exit point of capital to and from the cryptocurrency markets, many investors may be slowly refunding and putting capital that they took out of the markets back in. As they add capital, it first goes to Bitcoin which surges a little bit quicker than the other coins as the capital goes to it first. Also, if the investors are worried they will need to withdraw capital from the markets quickly, they may leave capital in Bitcoin until they believe that risk is over.
The Crypto-Market is Always Moving
Investing in the cryptocurrency markets can be a rollercoaster ride and many investors are not prepared for the potential volatility that comes with a 24-hour-7-day-a-week unregulated market. Most investors wake up to find positions and trades missed due to that 24-hour nature and volatility. When a market flash-crashes like it did, they are not sure how to properly protect capital against losses. Though it may seem easy to make returns in cryptocurrency, it takes a strong hand, solid investment strategy, and due diligence to achieve success.
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Tip for beginners:
BTC, in comparison to ALTs, usually loses the least in terms of percentage when the market is bear and gains the least when the market is bull. So, a strategy to try is to go to Bitcoin during market retractions and diversify to ALTs for market pumps.
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