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How are so many coins so locked in together?


meegwell
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The reason why fiat correlation happens on certain pairs is because those pairs get traded the most with one specific pair such as USD.
Let's assume the USD's value is coming from EUR and CHF.  Where EUR is giving $50 to USD, and the CHF is also giving $50 to USD. 

Now the value of USD is $100.

Let's now imagine EUR/USD goes down and now the EUR is only giving $0 to USD.  Now the value of USD is only $50 because it still has $50 from CHF.

It's a very simplistic example but that's how correlated pairs work in Forex.

Since all of our cryptos are traded in BTC,   so when you trade XRP on an exchange you use XRP/BTC,  you don't use  XRP/CHF,  it's all in BTC. And since all cryptos use BTC for trading, then the value of those cryptos is essentially 100% related to BTC.

If BTC goes down, then they all go down.

Now let's imagine that in the future on exchanges we will see more XRP/USD and less XRP/BTC,   this means that when BTC will go down it won't matter much because the value of XRP is supported also by USD as it is traded directly against USD and not BTC.

I hope that clarifies and if I'm wrong I'd love to hear it. 

Edited by MistaPrime
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49 minutes ago, MistaPrime said:

The reason why fiat correlation happens on certain pairs is because those pairs get traded the most with one specific pair such as USD.
Let's assume the USD's value is coming from EUR and CHF.  Where EUR is giving $50 to USD, and the CHF is also giving $50 to USD. 

Now the value of USD is $100.

Let's now imagine EUR/USD goes down and now the EUR is only giving $0 to USD.  Now the value of USD is only $50 because it still has $50 from CHF.

It's a very simplistic example but that's how correlated pairs work in Forex.

Since all of our cryptos are traded in BTC,   so when you trade XRP on an exchange you use XRP/BTC,  you don't use  XRP/CHF,  it's all in BTC. And since all cryptos use BTC for trading, then the value of those cryptos is essentially 100% related to BTC.

If BTC goes down, then they all go down.

Now let's imagine that in the future on exchanges we will see more XRP/USD and less XRP/BTC,   this means that when BTC will go down it won't matter much because the value of XRP is supported also by USD as it is traded directly against USD and not BTC.

I hope that clarifies and if I'm wrong I'd love to hear it. 

XRP/BTC accounts for "only" 40% of XRP trading, you can check the graphic in Ripple's website.

It's something that's been puzzling me as well, I get that fiat price attributed to crypto coins depend directly on the fiat price of Bitcoin, but what I don't get is that correlation by the second. Once BTC falls, the satoshi price most crypto coins buy/sell follows bit by bit that falling, like a choreographed dance. Someone said bots, how does this really work, would someone please elaborate? Thanks

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1 hour ago, MistaPrime said:

The reason why fiat correlation happens on certain pairs is because those pairs get traded the most with one specific pair such as USD.
Let's assume the USD's value is coming from EUR and CHF.  Where EUR is giving $50 to USD, and the CHF is also giving $50 to USD. 

Now the value of USD is $100.

Let's now imagine EUR/USD goes down and now the EUR is only giving $0 to USD.  Now the value of USD is only $50 because it still has $50 from CHF.

It's a very simplistic example but that's how correlated pairs work in Forex.

Since all of our cryptos are traded in BTC,   so when you trade XRP on an exchange you use XRP/BTC,  you don't use  XRP/CHF,  it's all in BTC. And since all cryptos use BTC for trading, then the value of those cryptos is essentially 100% related to BTC.

If BTC goes down, then they all go down.

Now let's imagine that in the future on exchanges we will see more XRP/USD and less XRP/BTC,   this means that when BTC will go down it won't matter much because the value of XRP is supported also by USD as it is traded directly against USD and not BTC.

I hope that clarifies and if I'm wrong I'd love to hear it. 

So what's the role of supply and demand ?

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3 hours ago, Blockchained said:

So what's the role of supply and demand ?

The pairs thing doest explain it for me.  If you buy XRP with BTC you are selling BTC (downward price pressure) and buying XRP (upward price pressure....and vice-versa.  Can’t compute the lock-step perfect minute by minute correlation.

 

bots however may make sense to me.  I used to do programmatic trading on a platform called Ninja Trader.  The crypto version of a trade example would be something like (although it would be in code script language) IF BTC price drops th x,xxx then buy x amount of BTC and XRP and LTC and ......etc.   If many big traders use the same signals I can see this explaining it....but don’t know.

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