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Author: Admin | 2025-04-27
Started gaining ground in 2021 — the era of the altcoin boom. Currently, it is one of the more reliable investing indicators around — more fundamental than technical — with BTC slowly getting into the stable crypto category. BTC Dominance: TradingviewBitcoin dominance chart: usesThe BTC dominance chart isn’t your regular trading indicator. However, it has the following uses, which require additional detailing. Risk aversionA growing bitcoin dominance chart shows that the current crypto traders and investors are slowly getting more risk-averse. This usually happens in a slow bear market when BTC looks like the most reliable option to invest and trade.Market overviewBitcoin’s growing stability is a reason why it is often inversely correlated with total market capitalization.BTC dominance between April 2019 and June 2021Overall market cap between April 2019 and June 2021The charts illustrated above show that when the BTC dominance was peaking the overall market cap continued to trade low and flat (few altcoins around). However, as the dominance started dropping starting June 2021, you can see the market cap chart showing a strong uptrend. TradeabilityBTC dominance isn’t just an index. Instead, on Binance, you can trade the BTCDOM/USDT perpetual futures. Therefore, using BTC dominance as a short-term and leveraged trading instrument is also possible, provided you know to read the Bitcoin dominance chart in relation to other metrics. A perpetual futures contract is more like a simple futures contract but without an expiry date. Benefits of the bitcoin dominance chartIf you can read the bitcoin dominance chart, you can expect to reap the following benefits:You might be able to spot the onset of bear and bull market phases.You could spot reversal patterns.It may be possible to identify new altcoin seasons; phases when altcoins boom in terms of valuation.In a bear phase, growing BTC dominance can forecast a short-term price consolidation phase, market-wide.Disadvantages of using the bitcoin dominance chartDespite the perks, the dominance chart isn’t perfect. Here are a few disadvantages to make peace with: Increased supplyAn increase in BTC supply due to mining activity might lead to an isolated surge in the bitcoin dominance chart. However, this kind of chart development isn’t particularly useful when it comes to analyzing the trading moves.Market cap shortcomingsMarket capitalization as a valuation indicator isn’t always accurate. There can be seasons when some altcoins pack a lot of market volume due to an increase in trading volume and activity. Even sentimental drivers can push up token prices, adding to the market cap. If the gain across other altcoins is substantial, BTC dominance might end up taking a hit.One such sentimental driver that has been pushing the DOGE prices through the roof.The real bitcoin dominance indexThe pitfalls of the dominance chart/index can be bypassed
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