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Author: Admin | 2025-04-28
Bitcoin (BTC) is the world's most traded and largest cryptocurrency. With a current market capitalization of over $543 billion, Bitcoin has the largest share of the entire cryptocurrency market. This guide explains what Bitcoin dominance is, how to calculate it, the factors that influence it, and other related details.What Is Bitcoin dominance?In simple terms, Bitcoin dominance is the ratio of BTC's market capitalization compared to the entire crypto market cap. Better still, it is the percentage of Bitcoin’s cryptocurrency market share from the total market capitalization of all existing cryptocurrencies. Total market capitalization refers to the total market value of all cryptocurrencies. An asset's market cap is determined by multiplying the asset's total supply by its current price.Many years ago, Bitcoin had 100% of the entire crypto market share, as there was a period in which it was the only tradeable asset. But with the introduction of Ethereum and other altcoins, Bitcoin dominance continued to drop. However, despite the thousands of altcoins on the market, Bitcoin's dominance is yet to be topped.How Is BTC market dominance calculated?Due to the cryptos volatile nature, Bitcoin’s dominance isn't fixed and is ever changing. For instance, at the end of March 2023, Bitcoin’s market cap was about $543 billion. At the same time, the global crypto market cap was $1.18 trillion. The Bitcoin dominance is the percentage that is calculated by dividing Bitcoin’s market share by the total market capitalization. Let's do the maths below: Bitcoin Market Cap ($543 billion) ÷ Global Crypto Market Cap ($1.18 trillion) x 100% = 46%. In this example, the BTC dominance ratio as a percentage is 46%.However, there's also a term called "Real BTC Dominance”. In this case, traders don't compare BTC's market cap with the global crypto market. Instead, it's compared with the combined market cap of proof-of-work cryptocurrencies. Some of these include Litecoin, Dogecoin and Bitcoin Cash. This method narrows BTC's performance to similar cryptocurrencies. The relationship between Bitcoin dominance and market capBitcoin dominance allows crypto traders to understand the trend of BTC and altcoins like Ethereum. Since BTC has the largest market share, it's easy to see the influence Bitcoin has on other altcoins. BTC's dominance has an inverse relationship with the market cap of other coins.For instance, when Bitcoin dominance increases, the total market share of other cryptocurrencies reduces in value. Similarly, when BTC dominance reduces, the altcoin dominance increases.Factors influencing Bitcoin dominanceAs stated earlier, Bitcoin dominance isn't fixed. The value changes from time to time due to various factors. Some of these influencing factors are highlighted below:Market volatility Arguably the most influential factor affecting Bitcoin's dominance is the market's volatility. As previously mentioned, the cryptocurrency market is highly volatile. This means the total market cap, including Bitcoin, experiences drastic changes. However, Bitcoin's market dominance can increase even when the total market cap plummets. It ultimately depends on the price movement of the altcoin market. If the value of altcoins takes a greater hit than Bitcoin's, then the Bitcoin dominance will likely rise.Altcoin performance
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