Kevin Murcko, CEO of cryptocurrency exchange CoinMetro has explained how cryptos hold comparisons with the way the stock market moves.
Mr Murcko said: “Much like the movement of stocks, cryptocurrencies tend to follow the general trajectory of the market and key players in that market.
“In the stock market for example, a negative financial report for one retail stock often hurts other retail stocks as collateral.
“In the crypto markets, this means that if bitcoin does well, or does poorly, these price changes are reflected in those of other cryptocurrencies.”
He went on to say that bitcoin is seen as the “base currency” of the crypto world, with the leading market capitalisation and a point of exchange with fiat currencies like the dollar.
Mr Murcko said: “For these reasons, bitcoin is enormously influential- a canary in a coal mine for other cryptocurrencies.”
This opinion is held by others in the crypto industry.
Rodrigo Marques, a crypto markets expert and CEO of investment platform Atlas Quantum said: “Long-term analysis shows that there is a strong correlation between most of the top 20 traded cryptocurrencies and bitcoin.
“A few altcoins such as Ripple and Stellar do seem to be slightly less correlated with bitcoin, but even these do show signs of some correlation.”
The birth of the crypto market has been a phenomena which has resulted in a lead virtual currency effecting the rest.
As Nicolas Van Hoorde, CEO of crypto portfolio tracker Delta said: “Almost every cryptocurrency has a BTC/ETH value, not a USD value. So you’ll find it as a trading pair on all the major exchanges, which puts huge importance on it within the crypto economy. If bitcoin’s USD value goes up, then a lot of other coin’s USD value goes up because of it.”
There are those who believe however, that over time bitcoin will lose this similarity with the stock market and its pull on other cryptos will diminish.
Barry Shteiman, a crypto expert and vice president of research and innovation at Exabeam a security company said: “Bitcoin’s value does have effect on other crypto. This is something that will decay in correlation over time, as other crypto such as Ethereum proves market and product value.”