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George Soros, the 94-year-old American billionaire, is renowned worldwide, for better or worse. His theories may explain some phenomena in cryptocurrency, particularly the faster decline of altcoins compared to Bitcoin 
$106,491. According to Matt Mena, a researcher at 21Shares, understanding why altcoins plummet more swiftly than Bitcoin can be insightful.
Why Do Altcoins Drop Faster Than Bitcoin?
Macro-economic data indicates that altcoins erode more quickly than the BTC price. This observation is not difficult to grasp, yet explaining it proves challenging. Various assets and altcoins exhibit a greater propensity for rapid decline. Mena examines this through the lens of Soros’s theories.
Soros gained significant notoriety in 1992 after triggering the collapse of the British pound. His reflexivity theory, developed in the 1950s, focuses on feedback loops where price movements influence investor behavior, which in turn affects prices further.
In the crypto realm, these feedback loops are more pronounced due to the speculative nature of altcoins. Assets with relatively lower market capitalization tend to be more volatile compared to Bitcoin.
Reduced Volatility with Bitcoin
When comparing BTC with altcoins like SOL, Bitcoin exhibits lower volatility. Traditional markets also show less volatility when compared to BTC. The stronger institutional adoption and liquidity of Bitcoin contribute to its resilience against reflexivity tendencies.
In contrast, price spikes in altcoins often occur due to abnormal movements triggered by a limited number of investors. The influence of time zones can further complicate these dynamics, as events affecting Asian markets may lead to negative psychological impacts on investors there, while U.S. investors may respond differently.
When the Bitcoin premium on Coinbase is positive and increases, it suggests that local investors are more motivated than their global counterparts. Beyond psychology and liquidity, factors such as high leverage in futures trading also contribute to the greater volatility observed in altcoins compared to Bitcoin.
