Bitcoin Dominance is understood as the percentage of Bitcoin’s market capitalization compared to the total of all other cryptocurrencies on the market. Thanks to this index, investors can grasp the upward or downward trend of Altcoins compared to Bitcoin.
If you want to know more information about Bitcoin Dominance, take some time to follow upcoming content from AZCoin.
What is Bitcoin Dominance?
Bitcoin Dominance or BTC.D, BTC Dom,… is a phrase used to refer to the percentage of Bitcoin’s market capitalization when compared to other Altcoins existing on the market. With this index, investors can more easily track the increasing and decreasing value trends of Altcoins compared to Bitcoin.
In other words, with Bitcoin Dominance we can know the level of market interest in Bitcoin compared to other cryptocurrencies. The information provided by Bitcoin Dominance will make it easier for investors to decide whether to invest in Bitcoin or any other Altcoin.
However, Bitcoin Dominance is very easily affected by factors such as:
- On-ramp operations via stablecoins.
- Community interest trends on platforms.
- Bitcoin price fluctuations.
All of the above points are things that investors need to pay close attention to when wanting to monitor Bitcoin Dominance.
How to Calculate Bitcoin Dominance?
If you are wondering how to calculate Bitcoin Dominance, an index that is the market capitalization rate of Bitcoin, here is the formula for you:
Bitcoin Dominance = Bitcoin Capitalization / Market Capitalization
Fortunately, currently, investors do not necessarily have to calculate and track Bitcoin Dominance themselves, but can use specific support tools. The tools we can recommend to you now are TradingView, Coingecko, Glassnode,…
Also, if you need more information about cryptocurrency and want to follow them more closely, you should check out the best crypto exchange site here.
Why is Bitcoin Dominance important?
With what we have gone through together, do you wonder why Bitcoin Dominance is so important? The reason is that thanks to this index, investors can grasp the circulation of cash flow thereby predicting market movements.
There are up to 4 possible scenarios including:
- Bitcoin Dominance increases, Bitcoin has a high value and dominates the market more than other cryptocurrencies.
- Bitcoin Dominance is decreasing, the other cryptocurrencies have high value and dominate the market more than Bitcoin.
- Bitcoin Dominance decreases, leading to a decline in the market. This is a sign of money exiting the cryptocurrency market.
- Bitcoin Dominance is flat or decreasing, other cryptocurrencies also have similar signs. This is a sign of a new price increase that could last 1 – 2 years.
Besides, if you have time, we suggest you check out other interesting content like What is Coinlist, Mining Monero, What is Crypto Lending,…
How does Bitcoin Dominance affect Altcoins?
Bitcoin Dominance can greatly affect Altcoins, as mentioned before when Bitcoin Dominance tends to increase, Altcoins will often decrease and vice versa. This is the action coming from the investment trend of the market.
In simple terms, when a new Altcoin is born or has notable changes and is of interest to investors. From here, investors can sell the Bitcoins they own to invest in potential Altcoins, which means using capital from Bitcoin to make other Altcoins grow.
In the opposite direction, when investors sell Altcoins they own to invest in Bitcoin, increasing the price of this currency will cause the price of Altcoins to decrease significantly. This means using capital from Altcoins to make Bitcoin grow.
Conclusion
Here is all the content we can share with you about Bitcoin Dominance. Hope it will be useful to you. If you have any other questions, don’t hesitate to contact AZcoin.
I am Tony Vu, living in California, USA. I am currently the co-founder of AZCoin company, with many years of experience in the cryptocurrency market, I hope to bring you useful information and knowledge about virtual currency investment.
Email: [email protected]
