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Bitcoin Dominance

 




What is Bitcoin Dominance?


Bitcoin Dominance is a metric that measures the proportion of Bitcoin's market capitalization relative to the total market capitalization of all cryptocurrencies combined. It indicates Bitcoin's share or influence in the overall cryptocurrency market. The dominance is calculated by dividing Bitcoin's market cap by the total crypto market cap and then multiplying by 100 to get a percentage.


This metric is commonly used to gauge investor preference and confidence in Bitcoin compared to other cryptocurrencies (altcoins). A higher Bitcoin Dominance percentage suggests that Bitcoin holds a significant portion of the market, showing stronger investor interest or trust in Bitcoin relative to altcoins. Conversely, a declining Bitcoin Dominance often signals growing interest and investment in altcoins, which can indicate an "altcoin season."


Bitcoin Dominance is useful for understanding market trends, investor sentiment, and for making informed decisions about trading or investing in the crypto market. It often rises during bearish markets when investors seek the relative safety of Bitcoin, and falls when altcoins gain traction in bullish or speculative market phases.


Summary formula for Bitcoin Dominance:




This metric provides insight into the market share dynamics between Bitcoin and the rest of the crypto market [1][2][3][4][6].


Citations:

[1] What is Bitcoin Dominance and How to Use it to Your Advantage? https://paybis.com/blog/glossary/what-is-bitcoin-dominance/

[2] 62. What Is Bitcoin (BTC.D) Dominance? - Kanga University https://kanga.exchange/university/en/courses/beginner-course/lessons/62-what-is-bitcoin-btc-d-dominance/

[3] What Is Bitcoin Dominance and How To Use It - CoinGecko https://www.coingecko.com/learn/what-is-btc-dominance

[4] What is Bitcoin Dominance (BTC.D)? And How To Use It Right https://www.stopsaving.com/what-is-bitcoin-dominance-btc-d/

[5] Bitcoin Dominance – What it is and How it Affects Altcoins https://www.tokenmetrics.com/blog/bitcoin-dominance

[6] What Is Bitcoin (BTC) Dominance? Chart Explained - Gemini https://www.gemini.com/cryptopedia/bitcoin-dominance

[7] Bitcoin Dominance | CoinMarketCap https://coinmarketcap.com/charts/bitcoin-dominance/

[8] Bitcoin Dominance Chart — BTC.D - TradingView https://www.tradingview.com/symbols/BTC.D/

[9] Bitcoin Dominance (BTC.D) - CoinGecko https://www.coingecko.com/en/charts/bitcoin-dominance

[10] What is Bitcoin Dominance And How It Predicts Altseason - YouTube https://www.youtube.com/watch?v=VKcVAYPncSU






How does Bitcoin dominance affect altcoin prices?

Bitcoin dominance generally has an inverse relationship with altcoin prices. When Bitcoin dominance rises, it means Bitcoin's market share is growing compared to all other cryptocurrencies. This often happens because investors move their capital into Bitcoin, which is considered relatively safer or more stable during uncertain or bearish market phases. As a result, capital flows out of altcoins, causing altcoin prices to stagnate or decline.

Conversely, when Bitcoin dominance falls, it suggests that investors are shifting funds from Bitcoin into altcoins. This lowering of Bitcoin dominance happens when altcoins experience stronger interest and price increases compared to Bitcoin. A decline in Bitcoin dominance is often taken as a bullish sign for altcoins, signaling the start or presence of an "altseason" where altcoins outperform Bitcoin with substantial price surges.

Thus, Bitcoin dominance affects altcoin prices through capital rotation dynamics and market sentiment:

- Rising Bitcoin dominance leads to capital consolidation in Bitcoin, putting downward or stagnant pressure on altcoin prices.
- Falling Bitcoin dominance reflects capital rotating into altcoins, often driving price increases for altcoins relative to Bitcoin.

The interaction is influenced by broader market conditions, investor risk appetite, and macroeconomic factors. During risk-off environments, investors tend to prefer Bitcoin, increasing its dominance and pressuring altcoins. In risk-on or bullish environments, capital flows to altcoins, reducing Bitcoin dominance and boosting altcoin prices.

In summary, Bitcoin dominance is a key market indicator that helps explain and anticipate shifts between Bitcoin and altcoin price performance and capital allocation in the crypto market [2][4][5][6][7][8][9][3].

Citations:
[1] Bitcoin USD Price: Quote, Forecast, Charts & News (BTCUSD) https://www.perplexity.ai/finance/BTCUSD
[2] What Altcoin Dominance Really Tells You, And How to Trade It https://www.coinapi.io/blog/what-altcoin-dominance-really-tells-you-and-how-to-trade-it
[3] How does BTC dominance goes down without the price going down? https://www.reddit.com/r/CryptoMarkets/comments/1hg3u2e/how_does_btc_dominance_goes_down_without_the/
[4] Understanding Bitcoin Dominance and Its Relationship with Altcoin ... https://www.linkedin.com/pulse/understanding-bitcoin-dominance-its-relationship-prices-somwanshi-wkgfc
[5] Get to Know Bitcoin Dominance and Its Impact on The Crypto Market https://www.cfx.co.id/en/news/get-to-know-bitcoin-dominance-and-its-impact-on-the-crypto-market
[6] What Is Bitcoin (BTC) Dominance? Chart Explained - Gemini https://www.gemini.com/cryptopedia/bitcoin-dominance
[7] Bitcoin Dominance – What it is and How it Affects Altcoins https://www.tokenmetrics.com/blog/bitcoin-dominance?74e29fd5_page=2
[8] Bitcoin Dominance – What it is and How it Affects Altcoins https://www.tokenmetrics.com/blog/bitcoin-dominance
[9] What is Bitcoin Dominance (BTC.D)? And How To Use It Right https://www.stopsaving.com/what-is-bitcoin-dominance-btc-d/
[10] How Bitcoin market trends affect major cryptocurrencies? https://www.sciencedirect.com/science/article/abs/pii/S0378437125002390


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