What is Bitcoin Dominance? How to use Bitcoin Dominance in Crypto Trading?
So yo have decided to make a future as a successful Trader. Let me share with you some secrets about bitcoin Dominance and its effect on whole cryptocurrency market. Let's Dive in
What is Bitcoin Dominance?
First we need to understand what is bitcoin dominance. Btc dominance is a ratio between market capitalization of btc to the total market cap of the entire crypto market and it is calculated by dividing bitcoin,s market capitalization by total market cap of all cryptocurrencies and multiplying by 100.
Bitcoin Dominance= (Bitcoin Market Cap/Total Crypto Market Cap) x 100
Bitcoin Dominance VS Altcoins
We can use Bitcoin dominance as a Trading indicator. Simply bitcoin dominance is a relative strength of bitcoin compared to other altcoins. Higher btc dominance means, traders are having more interest in bitcoin rather than other cryptocurrencies. Usually in General when btc dominance rise then altcoins market can crash. On the other hand if btc dominance decreases that's indicate Altcoins are gaining more market share.
How to use bitcoin dominance in Trading
Bitcoin dominance is often used as trading strategy. This helps the traders in many ways
Portfolio Diversification
Traders can easily diversify their crypto portfolio by observing the btc dominance.
Entry and exit from traders
Bitcoin dominance indicate us when to take entry or exit from bitcoin and altcoins. Let me make it simple, Use this formula,
Bitcoin Dominance High+bitcoin in uptrend = Sell Altcoins
Bitcoin Dominance High + bitcoin in downtrend = Buy Altcoins
BTC dominance Low + Bitcoin in Uptrend = Sell Altcoins
BTC dominance Low + Bitcoin in Downtrend = Buy altcoins
Market Sentiments Analysis
Above formula is clearly help us to understand the crypto market sentiments. We can easily monitor wether money is flowing into altcoins or bitcoin.
Want to learn more deeply about Bitcoin Dominance then read this Binance Article