BTC or Bitcoin Dominance is a very important indicator in the crypto world. Being the first-ever truly digital currency accepted by millions worldwide, BTC dictates the whole shape and direction of the total crypto market cap.
Bitcoin Dominance indicates if altcoins are outperforming, underperforming, or performing similarly to Bitcoin.
In short, BTC dominance is critical to understand how to read the Bitcoin and other crypto charts. But before we get to dominance, let’s explain what market capitalization is, shall we?
What is The Total Market Capitalization?
Market capitalization (or market cap) is the total value of all coins mined and circulated. It is calculated by multiplying the current market price of a single coin by the number of coins in circulation. In Lehman’s words, market caps help you visualize how big a cryptocurrency is and provide a fact-based look in real-time at how the whole industry is performing in general.
What is Bitcoin Dominance?
Bitcoin dominance, or BTC dominance, is the ratio of bitcoin's market capitalization to the remainder of the cryptocurrency market. So it is the percentage of the cryptocurrency market capitalization that is made up of Bitcoin. It is determined by dividing the entire market capitalization of all cryptocurrencies by the market value of Bitcoin.
Bitcoin Dominance is a key indicator that helps crypto traders and investors comprehend the market in relation to Bitcoin. If the BTC market share increases, usually this means the value of all altcoins will decrease and vice versa.
BTC dominance has a direct impact on altcoins since it shows how much of the market's trading volume is in BTC against how much of the market's trading volume is in altcoins.
What happens when BTC dominance is high?
Bitcoin has the most sway over the cryptocurrency industry since it was the first and most generally accepted form of cryptocurrency. As a result, the overall crypto market cap follows the trend established by the market capitalization of Bitcoin. When BTC Dominance rises, alts lose value in comparison to BTC. In general, if Bitcoin's dominance is increasing, traders propose that one holds more BTC than altcoins.
What does it mean if BTC dominance goes down?
When BTC dominance falls, alts gain value in comparison to BTC. If Bitcoin's dominance is declining, traders advise holding more altcoins than Bitcoin. how much of the trading volume is in cryptocurrencies In general, if Bitcoin's dominance is increasing, traders propose that one holds more BTC than altcoins. If Bitcoin's supremacy is waning, traders advise holding more altcoins than Bitcoin.
