Hang on a second, why the heck did Ethereum fall along with Bitcoin?

Scratch that, why did it fall harder than Bitcoin?

Ethereum is a mega platform of dApps and Financial services, running on its own blockchain and having its own believers. Why did it fall along with Bitcoin?

I decided to create this post because I saw this message while innocently surfing crypto twitter. Of course, the guy didn't get any serious answer. So I wanted to inform everyone, as well as link this post to the guy.

So here goes.

Remember that Bitcoin is the father of cryptocurrency. It has a 68% dominance(and that is on a bad day) over all other cryptocurrencies, and is the largest by market cap.

It's the same thing as the US Dollar basically on the fist side of things. It's extremely powerful, and other cryptocurrencies are "correlated" with it.

But what does this "price correlation" mean? You've probably heard it many times, but never really looked at it twice. 

Simply put, correlation is when traders of two cryptocurrencies think alike or think the same. Because most people believe that if Bitcoin can fall, other currencies would fall also. Also,many people who own bitcoin equally own Ethereum, and probably think in the same way.

The point is that Ethereum didn't have to fall along with Bitcoin, and neither did any other cryptocurrency. But when traders saw Bitcoin fall, they caused the other cryptocurrencies to fall, although not intentionally.

Believe it or not, so many other cryptocurrencies are up more than 20% off that drop of Bitcoin. I have been following a certain one that has been consistently up 20% everyday after Bitcoin's fall. That means that at any point in the day, you could (theoretically) buy at any point and sell your position for 20% profit within that same day.

There are also contracts such as ETHBEAR and BTCBEAR that are simply contracts that bet against price moves up in the certain cryptocurrency.

These contracts are usually 3X contracts, and can amplify both profits and losses significantly.

This means that if ETH moves up by 1 point, ETHBEAR drops by 3 points, and vice versa.

As you can probably tell, the ETHBEAR guys are super happy with themselves right now. Because the amount of movement down of Ethereum is their gain, but multiplied by 3.

Ethereum lost more than 60% of it's value. So they gained 180% on their investment.

But that's not the case study of this post.

So, in a nutshell, Ethereum fell because of its correlation to Bitcoin. It fell because sellers got scared that if Bitcoin could fall, Ethereum could also fall, and so therefore wanted to get rid of their Ethereum as quickly as possible. This caused a massive sell off in not just Ethereum, bit other big market cap crypto as well.

There you have it.