George Soros' reflexivity theory offers insights into why altcoins exhibit greater volatility than Bitcoin. According to Matt Mena from 21Shares, Soros' theory, which describes how price movements influence investor behavior, applies to cryptocurrencies. Smaller market cap altcoins are particularly susceptible to feedback loops, leading to exaggerated price swings as traders respond to macroeconomic data. Recent signals indicating potential Federal Reserve rate cuts have intensified risk-taking, resulting in significant inflows into altcoins, which amplify their price movements. For example, after recent inflation data, Bitcoin rose by 3.8%, while Ethereum and Solana jumped by 7.1% and 10.7%, respectively. While Bitcoin is known for volatility, its more established position and reputation as 'digital gold' mean it is less influenced by these reflexive cycles. However, other factors like liquidations and margin calls can further exacerbate market swings, particularly in the decentralized and fragmented crypto exchange landscape.

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