Bitcoin Dominance in Cryptocurrencies: What It Is and How to Interpret It
The dominance of Bitcoin (BTC), or any cryptocurrency, measures the percentage that its market capitalization represents relative to the total crypto market. For example, if Bitcoin has a dominance of 50%, it means that half of the total value of the crypto market is in BTC.
How to interpret it? High Bitcoin dominance: Indicates that investors are prioritizing more stable assets like BTC. This is common in times of uncertainty, as Bitcoin is perceived as the “safe haven” in the crypto ecosystem. Low Bitcoin dominance: Often signals a growing interest in altcoins. It can be an indicator of increased speculation or the rise of specific projects like DeFi or NFTs.
Dominance can be useful for adjusting investment strategies according to market trends, but it should not be analyzed in isolation.
The dominance of Bitcoin (#BTC ) and Altseason are closely related. When Bitcoin reaches new highs or increases its dominance, altcoins often experience a pullback, as investors tend to move their funds into BTC, considered the safest asset. However, during Altseason, altcoins outperform Bitcoin in returns, showing remarkable growth. Global news plays a key role in this dynamic, as events such as institutional adoption, regulatory changes, economic crises, or even technological innovations can influence investor confidence, impacting both Bitcoin's dominance and the growth of altcoins.