Do you have an explanation as to why a coin value in BTC also goes down when BTC dips.

So assume there's a coin called ALT that's worth 0.0005 BTC. Let's also assume that BTC is at $10,000. That makes the USD price of ALT to be $5.00.

So there are two possibilities here:

• the market values the ALT at $5.00
• the market values the ALT at 0.0005 BTC

If it's the first scenario, then when the USD price of BTC drops, the price of ALT should increase to compensate. So if BTC goes down to $8,000, the price of ALT should rise to 0.000625 BTC, so it's still worth $5.00.

If it's the second scenario, then when the USD price of BTC changes, it shouldn't affect ALT's price in BTC. The USD value of ALT will change of course, as you've described in this post, but it should still be worth 0.0005 BTC.

But what we're seeing in practice fits neither of those scenarios. What we see is that when the USD price of BTC increases, the price of ALT increases in both BTC and USD. Same with decreases. You can look at almost any CoinMarketCap graph showing both BTC and USD prices to confirm this.

There are occasions where ALT will move independent to BTC, for example if ALT gets listed on Binance, or if ALT is a large coin with a high-volume USD pairing like ETH. Those exceptions are understandable, but what I'm struggling to explain is why ALT moves in sync with BTC most of the time.

One theory I have is that a drop in BTC's price represents a general negative outlook of cryptocurrency, so holders of ALT are keen to cash out with the rest of the market. Since ALT often won't have a USD pairing, the holders will sell the ALT for BTC, which they'll then use to cash out to fiat. The selling on the ALT/BTC market would cause a drop in the price of ALT in BTC.

Do you have any thoughts or better ideas to explain the market behaviour I described?