  This study empirically examines interdependencies between BitCoin and altcoin
markets in the short- and long-run. We apply time-series analytical mechanisms
to daily data of 17 virtual currencies (BitCoin + 16 alternative virtual
currencies) and two Altcoin price indices for the period 2013-2016. Our
empirical findings confirm that indeed BitCoin and Altcoin markets are
interdependent. The BitCoin-Altcoin price relationship is significantly
stronger in the short-run than in the long-run. We cannot fully confirm the
hypothesis that the BitCoin price relationship is stronger with those Altcoins
that are more similar in their price formation mechanism to BitCoin. In the
long-run, macro-financial indicators determine the altcoin price formation to a
greater degree than BitCoin does. The virtual currency supply is exogenous and
therefore plays only a limited role in the price formation.
