It is strongly correlated from what you see in the data trends. Let’s explain the basics then throw some examples.
Simple math, ALT/BTC ratio would decrease if:
- ALT coin’s value drops (i.e. people are selling the ALT coin or trading it for BTC or other ALT coins).
and/or - BTC value increases (i.e., more demand for BTC from various accounts including USD and ALT coin conversion)
Similarly, ALT/BTC ratio would increase if:
- ALT coin’s value increases (i.e. people are buying an ALT coin by trading BTC or other ALT coins).
and/or - BTC value decreases (i.e., BTC is cashed out for USD or other currency or traded for ALT coins)
Example 1: Recently you may have noticed that the increase of ALT coin’s value is highly correlated with the increase of BTC and vice-versa. Let’s add the USD to the ratio where ALT/BTC is also ALT/USD / BTC/USD. If people are buying more bitcoins then they are increasing the BTC/USD value. But since ALT is also rising, it means that BTC is also traded to buy ALT resulting in an increase of ALT/BTC which can also be translated to an increase of ALT/USD. The opposite is also correct, the decrease of ALT/BTC and BTC/USD together is a result of a quick sell of both BTC and ALT.
Example 2: You notice an increase of ALT/BTC and a decrease of BTC/USD. Remember that ALT/BTC is also “ALT/USD / BTC/USD”, so if BTC/USD is decreasing and ALT/BTC is increasing, that means that a good sum of traders are either holding on to their ALT coins and/or trading BTC for ALT while others are shorting BTC for USD in the market.