Cryptocurrency beginners often wonder if the price of cryptocurrency coins is the same at a particular point in time.
This question might sound silly to those experienced in cryptocurrency – Bitcoin obviously costs significantly more than any other cryptocurrency. However, there is a little more to this question than first meets the eye, which is why it’s so interesting.
To be perfectly honest, the answer might surprise you.
Are cryptocurrency coins prices ever the same?
As mentioned earlier, the answer to this question is obviously “no” when comparing any coin against Bitcoin. Bitcoin simply costs way more money than any other coin on the market.
The interesting part is when you compare price trends of different coins against bitcoin. Or even the different coins to each other.
For that question, the answer is a resounding “yes.”
Coins generally track the price of bitcoin. What exactly does this mean?
If the price of bitcoin goes up, then the price of other cryptocurrency coins will also rise.
As far as different cryptocurrency coins having the same price, it happens from time to time if the price is similar, but it’s rare. It’s also not particularly important if the prices of two cryptocurrency coins are the same.
Do Bitcoin and Litecoin have a price correlation?
First, Bitcoin and Litecoin will obviously never cost the same amount. The price difference between the two is extraordinary.
However, the two coins do have quite the price correlation. Historic data indicates that Bitcoin and Litecoin have a 0.6-0.8 price correlation, which is statistically significant.
In other words, it isn’t an accident or random that Bitcoin and Litecoin tend to rise in price and fall in price around the same time. This raises an interesting question.
Why does the price of Bitcoin and Litecoin go in tandem?
Mostly because the two coins are viewed as extremely similar by cryptocurrency experts. And that’s true, the two coins are very similar.
The technology the two coins use is similar with mining blocks to power the network. On top of that, the two cryptocurrencies have very similar uses – they’re both meant as a cryptocurrency for transactions.
Basically, the price of Bitcoin rising or falling indicates confidence or fear about the future of the Bitcoin concept. And since Litecoin is similar to Bitcoin, the price of Litecoin tends to rise and fall alongside Bitcoin.
One more thing, Bitcoin is also sometimes used to purchase Litecoin. It’s not necessary because Litecoin is available on Coinbase, but it does happen frequently enough that it can’t be ignored as a factor in the price correlation between the two coins.
Why do other cryptocurrency coins follow Bitcoin’s price?
There are a few reasons that other cryptocurrency coins follow the price of bitcoin. Here are those reason laid out in a simple, easy-to-understand manner:
Bitcoin is the most popular cryptocurrency
The main reason other cryptocurrency coins follow the price of bitcoin is that Bitcoin is the most popular cryptocurrency coin on the market. It has over 50% of the total market cap for cryptocurrency.
Why is this important?
It means that Bitcoin is synonymous with cryptocurrency. Basically, when people associate any news with Bitcoin about news with cryptocurrency. For instance, if there is a negative article about Bitcoin and the price drops, then people will associate that with a weakening of cryptocurrency.
Fortunately, this applies both ways. If there is good news about Bitcoin, then the price of other cryptocurrency coins will rise.
Bitcoin is used to buy many cryptocurrency coins
Another major factor that influences the price of cryptocurrency is that bitcoin is used to purchase many other coins.
In fact, the majority of alt-coins can only be purchased with bitcoin.
This means that the price of bitcoin will directly impact those coins. If the price of bitcoin falls, then the price of any cryptocurrency coin that requires bitcoin to purchase will also fall as a function of the exchange rate.
Does the price of Ethereum correlate with other cryptocurrency coins?
Yes. The price correlation between Ethereum and other cryptocurrencies is apparent. The price of Ethereum and other cryptocurrency coins is usually never the same, though.
Why does the price of Ethereum correlate with certain altcoins?
The reason for this is simple:
The Ethereum platform can be used to build altcoins.
This means that any price change in Ethereum will directly impact the price of the altcoin. Especially because Ethereum is usually the only way to purchase those altcoins.
To further intertwine things, any news about potential forks of the Ethereum project will cause the price of altcoins to plummet. This is because the entire future of the base platform gets put into question if a hard fork were to occur.
Do Bitcoin and Ethereum have a price correlation?
That’s right, the price situation between the two most popular coins on the market is a little more complicated than a direct correlation.
In fact, there doesn’t appear to be that much of a correlation between the price of the two coins. Sure, if bad news about cryptocurrency breaks, then both coins will drop in price. But in normal day-to-day trading the price of the coins doesn’t correlate all that much.
This might sound strange, but it makes sense. Ethereum is often purchased to later purchase altcoins. Bitcoin, on the other hand, is usually purchased as an investment or for trading.
In other words, people purchase the two coins for completely different reasons.
That’s all that needs to be written about the price between different cryptocurrencies. To answer the main question, the price of cryptocurrency coins is rarely ever the same at a particular time. And no cryptocurrency coin is ever the same price as Bitcoin because Bitcoin simply costs much more money than any other cryptocurrency coin.
The more important factor is whether a cryptocurrency coin has a correlation with another coin. And the answer to that is yes.
Cryptocurrency coins will often correlate with other coins. This is especially apparent with Bitcoin and Litecoin and Ethereum and altcoins built on the Ethereum platform.