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Bitcoin Dominance: The Metric that Defines the Crypto Market
What is Bitcoin Dominance, Really?
Imagine the cryptocurrency market as a pizza. Bitcoin dominance is the percentage of the slice that Bitcoin takes. If the total market value is $2 trillion and Bitcoin represents $1 trillion, its dominance is 50%. Simple.
How It’s Calculated
Basic formula: BTC Dominance = (Bitcoin Market Value / Total Crypto Market Value) × 100
Real example: If BTC = $1 trillion and everything else = $1 trillion, then dominance = 50%. When dominance rises, it means investors are choosing Bitcoin over altcoins.
The 4 Scenarios When Dominance Rises
What Does It Mean When It Drops?
It’s the reverse. Altcoins gain relative traction. But here’s the key: it doesn’t guarantee altcoins will go up in price. It just means interest is being redistributed.
Halving & ETFs: The Catalysts
Bitcoin halvings usually shake up dominance because they generate massive volatility. Spot Bitcoin ETFs (like those recently approved) tend to increase dominance because they make institutional entry into BTC easier.
Key Thresholds
The Truth No One Tells You
Dominance DOES NOT predict prices. An altcoin can go up 500% while Bitcoin dominance rises. The metric only shows where relative capital is flowing, not the absolute direction of prices.
Strategy According to Dominance
The crucial thing: dominance is a compass, not a map. Use it together with volume analysis, sentiment, and fundamentals.