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Author: Admin | 2025-04-28
In this beginner’s guide, learn the ins and outs of BTC dominance — what it means, and what happens when BTC dominance goes up or drops.Key Takeaways:BTC dominance is the ratio of Bitcoin’s market cap to the overall market cap of cryptocurrencies.It is used by crypto traders to get a pulse of the market and spot possible trends and trading opportunities.Bitcoin’s fluctuating dominance over time can help traders decide how to position themselves in the market.It is worth noting that BTC dominance of the market cap does not reflect its real value, nor does it mean a sudden influx of money to the market.The increase or decrease of BTC dominance is not necessarily a good or bad thing; it serves strictly as a tool that may give market participants a better perspective of how the crypto space is evolving.Introduction — What Does BTC Dominance Mean?In simple terms, BTC dominance or Bitcoin dominance is the ratio of Bitcoin’s market capitalisation to the global market cap of cryptocurrencies. But for those new to the crypto space, what exactly does this mean, and how is it used? Below we outline the ins and outs of this important metric.What Is BTC Dominance? In more detail, BTC dominance is a percentage value that is calculated based on Bitcoin’s current market cap divided by the global crypto market cap. For example, at the time of writing, Bitcoin’s market cap is US$539 billion, while the global crypto market cap is US$1.16 trillion. Dividing $539 billion by $1.16 trillion equals 46% — this is the share of the crypto market cap in Bitcoin.Bitcoin’s market cap is calculated by multiplying the number of bitcoins in circulation by its current market price per coin. To date, there are approximately 19.6 million bitcoins in existence (with a maximum supply of 21 million), trading at the price of around US$50,000 — the market cap at the time of writing is therefore over US$1 trillion. How Crypto Traders Use BTC DominanceThis ratio is derived from Bitcoin’s relationship with the rest of the crypto market. It serves as a metric that may be used by crypto traders to get a pulse of the market, manage risks, and help spot possible trends and trading opportunities, typically in conjunction with other datasets.Looking at historical data, a significant portion of the crypto market has generally followed the shape and direction that Bitcoin takes (see diagram below). Since Bitcoin dominates the majority of the overall crypto market cap, it has historically been highly and positively correlated with the majority of altcoins, which then heavily react to its price movement. With this correlation, some suggest that Bitcoin dominance can also help in understanding trends in the altcoin market.When Does Bitcoin Dominance Change? To understand what affects the changes to Bitcoin dominance, let’s look at the two factors that make up the ratio: Bitcoin market cap and the global crypto market cap. For example, because the amount of bitcoins in circulation will not significantly increase in a short time, Bitcoin’s
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