What Is Bitcoin Dominance?

The calculation is simple: Bitcoin's market capitalization is divided by the total crypto market capitalization and multiplied by 100. For example, if the total market cap is 100 units and Bitcoin's market cap is 50 units, dominance is 50 percent. In its early years, Bitcoin made up almost the entire market; as the number of altcoins grew, its share began to fluctuate and in some periods declined noticeably.

Investors track dominance to interpret market cycles. A rise in dominance can indicate that capital is moving toward Bitcoin, which is seen as relatively less risky, or that altcoins are losing value faster. A fall in dominance is associated with periods in which altcoins stand out, that is, with expectations of an altcoin season. The indicator can also be tracked on charting platforms with codes such as BTC.D.

The indicator has limits. The data of the thousands of tokens included in the total market cap may not be reliable. Also, the growth of stablecoins can lower Bitcoin's share without any new risk capital entering the market; for this reason, some analysts also look at calculations that exclude stablecoins. Because data sites include different assets, values can vary from site to site.