Lesson 8: Bitcoin and Altcoins

🪙 Reading Crypto Charts in 5 Minutes · Lesson 8 of 10

Last lesson you learned to spot the handful of chart patterns that show up over and over in crypto. Now we zoom out to the thing that moves almost all of them at once: Bitcoin.

Crypto is not a basket of independent assets that each do their own thing. It moves like a school of fish, and Bitcoin is the fish at the front. Once you understand that relationship, a lot of confusing price action starts to make sense.

Why Bitcoin leads

Bitcoin is the largest crypto by a wide margin, and it's the asset most big money buys first. When institutions or funds want exposure to crypto, BTC is the default. When they get nervous and pull out, they sell BTC first too.

That makes Bitcoin the market's mood ring. When BTC is trending up calmly, traders feel safe holding riskier coins. When BTC dumps 8% in an hour, people sell everything to raise cash, and the rest of the market drops with it. The cause starts at the top and rolls downhill.

So the first chart you open every day is BTC, even if you never plan to trade it. It sets the weather for everything else on your screen.

What BTC dominance tells you

BTC dominance is Bitcoin's share of the total crypto market value. If the whole market is worth $2 trillion and Bitcoin is $1.1 trillion of that, dominance is 55%. You can pull this up as its own chart on most platforms, ticker BTC.D.

Dominance moving up means money is flowing into Bitcoin faster than into the rest of the market. Often that's a sign traders are playing it safe or rotating out of smaller coins. Dominance moving down usually means money is spreading into altcoins, the move people call "alt season."

How altcoins move relative to BTC

Most altcoins have a high correlation to Bitcoin, meaning they tend to move in the same direction. But they don't move the same amount. Alts have a higher beta, which is a fancy way of saying they swing harder in both directions.

A rough mental model: if Bitcoin goes up 3%, a large-cap alt like ETH might go up 4-5%, and a small, thin coin might rip 15% or drop 15% depending on the day. The smaller and less liquid the coin, the more violent the swing. That extra range is exactly why alts attract traders and exactly why they hurt when the move goes against you.

The catch: when Bitcoin falls hard, alts almost always fall harder. A 5% BTC drop can mean 10-20% off a small alt. People who only watch the alt and ignore BTC get blindsided by moves that were clearly coming from the top.

Why you check BTC first

Say you find a clean setup on a mid-cap altcoin. The pattern looks textbook and you're ready to buy the breakout. Then you open the Bitcoin chart and BTC is sitting right under a wall of resistance after a big run, looking heavy and ready to pull back.

That changes everything. If BTC rejects that level and slides, your perfect alt setup probably gets dragged down with it, breakout or not. The alt chart was telling you one story, but the asset steering the whole market was telling you another.

So the order matters. Read the leader, then read the follower. Checking BTC first isn't about trading Bitcoin. It's about knowing which way the current is flowing before you jump in anywhere else. Big players move in repeatable ways here too, which is why smart money concepts apply across the whole market, not just one coin.

A simple top-down check

Do that check and you'll avoid a whole category of losing trades, the ones where your analysis was right but the market backdrop was wrong. Most of the time, fighting Bitcoin is a losing game.

Next up

You can read the leader, spot the setup, and pick your coin. None of that protects your account if the trade goes wrong. Lesson 9 covers risk in crypto: wider stops for wild moves, sizing from a fixed percent of your account, and why leverage wipes people out faster than any bad chart read ever could.