Why is bitcoin called digital gold?

By 23/06/2021News

Gold  1780,54

EURUSD   1,1919

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DAX   15610,50

First this year, bitcoin managed to double in value and then fall by the same amount. At the same time, many altcoins have risen 10-20 times in that time, and now have fallen just as quickly. Why does this happen? And how can this help traders?



Cryptocurrencies are subject to common market cycles. And the traders who trade them are subject to common emotions with the stock and currency markets.
Gold, by itself, does not generate cash flow. When the risk appetite grows in the market, other risky assets, including metals and precious metals, can rise very strongly against gold. On the other hand, when markets correct, when investors run away from risk, all these risky assets fall against gold no less, and even faster.
Sound familiar? This is exactly what we see in the cryptocurrency market in relation to bitcoin. And that’s why we call it digital gold. Since the beginning of this year, only a lazy man has not criticised the first cryptocurrency for growing extremely slowly. Slow in comparison not even with most altcoins, but with the top ten coins in terms of capitalisation. Such as Ether, Cardano, Dogcoin etc.
But what happened next? When the market began to correct, for the first few days you could see the following situation. Bitcoin falling by 5% and other cryptocurrencies falling by 5%. However, this did not last long. Major investors remembered that there is only one digital gold. What happens next is that the situation develops like this. On any strong down day, bitcoin falls by 5% and alts by 7%-12%. And so it goes on day after day.
On rising days, on the other hand, bitcoin rises 5% and alts only 3%-5%. In fact, bitcoin’s dominance of the market is increasing rapidly. Investors are willing to sell it last, getting rid of other cryptocurrencies. Alternatively, they are directly converting altcoins to BTC.
Why do traders need to understand this process? It’s simple. The market will only continue to grow when altcoins rise much faster than bitcoin on the rising days. And on down days, they will fall almost as fast as the bitcoin.

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