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Ethereum ascending and descending: unpack behind the depreciation of Bitcoin
At the beginning of January 2015, the cryptocurrency market was sudden and significant when it lost about 80% of Bitcoin (BTC) in just one month. This phenomenon has wondered what led to such drastic price drops. To be submerged in the causes of this huge recession, look at the key factors that have contributed to the deterioration of Bitcoin.
Ethereum Rise: Catalyst for Autumn
As we know, Bitcoin was launched by an individual or anonymous group in 2009 with the pseudonym Satoshi Nakamoto. Its initial success is largely due to its innovative technology, which introduced a decentralized and unreliable system for safe electronic transactions. However, over time, Bitcoin faced a growing competition with other cryptocurrencies that offered qualities similar to lower costs.
Ethereum (ETH), launched by Vitalik Butein in 2015, is often accredited to the traditional blockchain disorder. Ethereum’s intelligent contractual platform has allowed developers to make decentralized applications (DAPP) without central authority or mediators. This created a new paradigm to process safe and effective transactions.
Ethereum Rise: Catalyst for Autumn
At the same time, it was not only the introduction of Ethereum to the Bitcoin decline. The two cryptocurrencies have different market structures and uses. The price of Bitcoin was very influenced by its limited offers (only 21 million currencies) and its acceptance of value and exchange as a deposit.
Ethereum, on the other hand, has been mainly traced due to the growing decentralized applications ecosystem, which attracted new users and developers. Ethereum’s intelligent contractual platform has allowed developers to make complex applications that can interact with each other decentralized, facilitating a more open and interoperable ecosystem.
The price drop: the complex interaction of the factors
So what led to a quick fall in Bitcoin? Many factors contributed to this phenomenon:
- Too saturation : As Ethereum’s intelligent contractual platform became popular, it attracted new users and developers who attracted attention to complex applications.
- Increase in competition : Other cryptocurrencies such as Litecoin (LTC), Dogecoin (Doge) and Monero (XMR) entered the market, competing directly with Bitcoin for attention and adoption.
- Emotions of the market : The growth of the Ethereum ecosystem has led some investors to receive Bitcoin and are considered less safe and volatile due to the lack of support of decentralized applications.
- Liquidity problems : Bitcoin has become more popular, liquidity has fallen into the market, which makes merchants difficult to buy or sell the currency at a competitive price.
- Regulatory uncertainty
: cryptocurrencies, such as Bitcoin, have created uncertainty and volatility among investors.
What leads to the price of alternative currencies lately?
The current decrease in cryptocurrency prices is partly attributed to many factors:
- Regulatory uncertainty : As mentioned above, regulatory control has resulted in greater volatility and uncertainty among investors.
- Liquidity problems : The reduced liquidity in the market made it difficult for merchants to buy or sell cryptocurrencies at a competitive price.
- Too saturation : Increase in the Ethereum ecosystem increased attention and adoption, which reduces demand and lower prices.
- Emotions of the market : The decrease in Bitcoin was led partly by bets against the currency and is considered less safe and volatile due to the lack of lack of decentralized applications support.
