The common understanding of the cryptocurrency space is rapidly improving. Content creators, Influencers and YouTubers are also good at turning complex jargon into easy-to-digest information. The community recognizes that the correct classification of cryptocurrencies increases the chances of finding new good projects early.
The classification of cryptocurrencies helps to compare them. In order to effectively compare cryptocurrencies, you need to know what they are and whether others are doing the same. That’s why you can’t compare Dash with something like ADA. One is a payment cryptocurrency, while the other is a useful proof-of-stake smart contract platform token.
Correlations: BTC vs. altcoins
Another argument for classifying “BTC vs. altcoins”There are different correlations between BTC and other coins. While in some pairs the correlation is high, others show weaker interdependence. For example ADA a XRP show a lower correlation with other digital assets. Not to mention that stablecoins like Tether (USDT) show negative correlations.
You can have your cryptocurrenci portfolio divided between several coins that fall under different classifications, and thus diversify within cryptocurrency market. Not all altcoins correlate with the market in the same way.
Although a growing number of new crypto concepts are emerging, we can still put all of them – DeFi, GameFi, NFT and meme tokens – under the auspices of altcoins. From the point of view of traders, many believe that altcoins will have a higher return in the future, although so far there may be a weaker dominance than in the case of BTC.