Since it is completely based on the free market, the price corrects itself as well after posting major gains. But, we have seen how other cryptocurrencies like Ripple, Ethereum and even Litecoin have progressed even when bitcoin itself was sliding further and further down. This begs a question.
What will happened to the rest of the cryptocurrency market including its closest competitor Ethereum if its prices suddenly fall significantly?
Just like every prediction on cryptocurrencies, there is no sure shot answer of this question. Bitcoin is an incredible up and coming currency that is becoming popular around the world as its use is increasing and utility being realized. In many ways bitcoin fulfills money transfer like no other option as it is fast, P2P and decentralized.
While its price may drop up to a thousand dollars in one day, it always gets back on feet and moves on to bigger and better things.
There are certainly no predictions in any part of the crypto that bitcoin prices will face an enormous drop like half or even lower. The reason is solid; bitcoin is only beginning to make inroads around the world and people are buying more and more bitcoin which keeps its price increasing.
We can say that the price of bitcoin is a little inflated right now but we all know that it is not just speculation and trading that determines the price of bitcoin. It is its ever-increasing demand as a currency and means of transferring money that increases its appeal.
But, since crypto world is completely unpredictable, we will continue to deal with this hypothetical situation. What will happen supposedly if bitcoin prices suddenly fall and what will be its effect on Ethereum and the rest of the pack? Let’s take a look at the reasons why bitcoin prices fall or increase.
The price of bitcoin is affected directly by two things; interest in other altcoins vis-à-vis bitcoin and the overall attraction of the altcoin world itself. Now we have seen that smaller currencies sometimes suddenly make gains against the bitcoin and fiat currencies. We can see that happening but at the same time, the price of other cryptocurrencies remain the same.
and bitcoin price.
This effect keeps balancing itself as people while alternating between different forms of currency always end up back at bitcoin itself. So, if bitcoin prices drop a large amount, it can mean that one or more major alternatives like Ethereum, Ripple and Litecoin have posted gains against the main bitcoin.
They can do it simultaneously and separately. So, if you see the price of bitcoin going down a lot and the price of another cryptocurrency or cryptocurrencies increase drastically, you would know that investors and users are losing their faith in bitcoin for the time being at least and shifting to another cryptocurrency which is just as good when it comes to security.
If the bitcoin price doesn’t increase soon enough, you will be able to see that this change could become permanent and the alternative cryptocurrency which could be one of its forks like bitcoin cash or bitcoin gold is trying to take over bitcoin. These currencies can also make a combined challenge. So, these other currencies can increase significantly if bitcoin prices drop. That you can be sure of unless the other thing happens. You can read about it in the next paragraph.
There is the other case which is even less likely, at least in the short term and that is the lack of interest in cryptocurrency world. You can see that people are very interested in bitcoin and other cryptocurrencies and invest in them heavily for a variety of purposes.
They include savings for long term and swing trading and even sending money across the world. If for some reason, people start abandoning the cryptocurrency trading method and either go back to the original fiat currency system or something else, it will see a flurry of activity in the bitcoin selling areas and the price of bitcoin will drop a significant amount.
But, what will happen to the other altcoins? The answer is pretty straightforward; the will lose a large chunk of their value too.
Why will that happen?
The reason is that people are dumping altcoins and getting back to fiat currency or any other alternative. When they are going to dump the crypto world it will not just be bitcoins. It will affect all of these coins from Ethereum, Ripple and other heavy weights to smaller coins like Groestlcoin with only a few million dollar market cap. So, it will be a slugfest of cryptocurrencies and many of the platforms will experience immense bearish trend.
Perhaps the other cryptocurrencies will post an even worse result than bitcoin itself.
The reason is that bitcoin’s network is the most secure decentralized network in the entire world and if its no longer reliable for some reason (even though it may never happen) people will surely dump the other altcoins for as much money as they can possibly get and bail out.
So, what will actually happen?
Well, what could actually happen is that bitcoin is a little too much saturated right now. As we have seen with the unconfirmed transactions that are becoming somewhat of a problem right now, bitcoin is not as viable and attractive as a cryptocurrency in between for people because of higher fees and backlog of transactions.
You know that during the timeframe when SegWit 2 was being discussed and eventually abandoned, bitcoin’s price fell almost $1500 while the price of Dash and Ethereum increased. So, it shows that due to disagreements in the bitcoin network and avoiding much needed updates to it, we can see that people can start abandoning bitcoin for the time being while the mess is being resolved. So, people invest in Ethereum, Dash, Litecoin and even its fork Bitcoin Cash instead.
With the advent of bitcoin gold, it could become even more unpredictable than before. So, if the original bitcoin’s prices drop, it is very likely going to be because some other cryptocurrency is suddenly more attractive to the users for a wide variety of reasons. It could be the fact that bitcoin became slower than ever or that miners are creating problems with its network causing fees to become much higher. So, people disassociate from bitcoin for a while and then during the transitional period, you can see that the rest of the cryptocurrencies will post massive gains if you look at them as a whole.
Regarding the possibility of a bitcoin and altcoin meltdown in one go, that is not going to happen in the near future. We might see tens of billions wiped away from the market cap but that is all that is going to happen because people trust the tech much more than ordinary systems of transferring money and fiat currencies themselves. They are much more of a mess now than they were before and it is a universal fact that they will be artificially devalued and rigged even more so in the times to come. So, a complete meltdown is out of the question right now.
Bitcoin is not a bubble of speculation like Wall Street that it will come crashing down and everybody’s money will be lost.
Remember that if you have your private storage of bitcoins in wallets that are safe, they will never go away since the network of nodes operating the bitcoin is always going to be there, no matter how low the bitcoin price can go.
The people holding bitcoins will at least never shut down their nodes as it is a hope for them that what they own will eventually bounce back and be worth something again. So, bitcoin can never be lost and forced into non-existence just like intrinsic currencies cannot be pushed into oblivion. So, keep expect the prices of Ethereum, Ripple, Litecoin and the rest of the pack to increase individually and as a whole if bitcoin’s value drops a lot.