Bitcoin is the "World Reserve Currency" in the entire marketplace of crypto-currencies also known as altcoins. As the tide comes into Bitcoin and levitates its price so do all those currencies rise much like ships in a harbor. Thus the entirety of $ value exchange is increased in what I will term as "CryptoWorld." As the tide goes out of Bitcoin and its price declines the inverse happens.
Aside from this basic generality Bitcoin does not act like other markets. (yet) What moves it and the entirety of Cryptoworld is adoption and promotional events of substantial traction. It currently reacts and is somewhat affected by broader market trends. (e.g. - If the DOW is steeply declining then there is a mild to moderate decline in the price of Bitcoin and the entirety of "Cryptoworlds" volume and values.)
It is less tied to indicators than even many currency pairs. Adoption and promotion are what establish demand right now in this turbulent, volatile, unsubstantiated and unstable market. Such are the frailties of fiat valuations in commerce.
The entire globe however is quite used to fiat and increasingly becoming aware of the machinations of it in centralized banking. Now a decentralized opportunity arises that will include the largest of global economies; economy D. This battle of centralized control of economy D has played out throughout history time and again.
The real money to be made however is in the lesser known more robust Alt-Coins and their beneficial volatility in a Bitcoin uptrending market. However we are talking ridiculously treacherous waters with no regulation, accountability or analysis tools.
So why bother with any dangerous Altcoins? I suggest you don't (Not Yet) other than maybe Litecoin. (Even Blackcoin and Darkcoin/Dashcoin.) I think they are worth it as my immersion style of learning requires me to wade into dangerous waters to master a market and establish proof of concept trade systems.
I believe Bitcoin is here to stay. There are just too many reasons it can and should continue to be adopted and too many Billionaires and great tech minds globally that see it as the future and are behind it's promotion and adoption.
If Bitcoin is here to stay then Altcoins will also develop. Currently Litecoin is the value reference for the mining industry part of all cryptoworld whereas Bitcoin is the trade value reference of all cryptoworld.
Mining - Coins are "mined" by video cards, asic machines and even cpu's. That "mining" is just machines doing complex calculations within the blockchain network with certain coin rewards offered in certain blocks. (Far more complex than that but mining rigs from 10Khs to 2 terrahash/s power are working hard to bring more coins to the market. (BTW - I have 3 mining machines just to stream BTC and understand that side of the equation of the marketplace.)
Value erosion and total market cap are nearly impossible to calculate in Cryptoworld. However one must understand that while each coin has a set number of coins that can be produced; there are no set numbers of different coins that can be in the market. The market sets that by interest and competition. As Bitcoin increases in value the entire cryptoworld marketplace bleeds value out of Bitcoin. They all ride the Bitcoin train and live or die by its adoption or failure.
Trade costs are nearly zero in this market, speed of transaction is only going to improve. (re: Googles www.buttercoin.com) The largest influx of dumb-money in history is flooding into this market. There just isnt any sophistication or tools available yet in Cryptoworld except for Metatrader through BTC-e. And that is only for Bitcoin currently. (Decent platform with pretty good indicators if you hunt for them.) BTW - The Kid down the street will be mining coins and selling them without Market Savvy.
Imagine if I told you that you could buy AAPL for $50 per share today. Never going to happen in today's competitive marketplace. Maybe back when none of the major exchanges were connected there were great Profits in trading IBM between exchanges.
Well those opportunities are all over in Cryptoworld and then some. trade between exchanges. Get orders filled at 1/10 their market value arbitrage, shaving, and just about any other edge one has conceived. (And just about every other danger as well.)
So there you have it … this is a brand new frontier that is even more lucrative than the first few weeks of the infancy of currency trading.
Primer on the basic infrastructure: Mining pools are the only real indicators of altcoin world thus far. They run complex value algorithms searching for the best coin to mine and trade. Again referencing on Litecoin as to value and on Bitcoin as to payout; they are together a conglomerate pulse of AltCoin valuation and it's market rise and decline.