What is Bitcoin Dominance and Why Is It Important?

What is Bitcoin Dominance?

Bitcoin dominance shows what percentage of the total market value of all cryptocurrencies is represented by Bitcoin. Bitcoin dominance literally means: what percentage of all the money currently in crypto is invested in Bitcoin. Or even simpler: what portion of the total crypto market consists of Bitcoin?

To calculate that, you look at the so-called market capitalization (market cap). That’s a fancy term for: the total number of coins in circulation multiplied by the price per coin.

Example:
Let’s say Bitcoin is worth 30,000 euros and there are 20 million bitcoins in circulation, then Bitcoin’s market cap is 600 billion euros. So if there’s currently 600 billion euros in Bitcoin, and the total market cap is 1000 billion euros (including coins like Solana, Ethereum, etc.), then you can say that Bitcoin dominance is currently 60%. That means 60% of the total is Bitcoin at the moment. Easy, right?

So: the higher that percentage, the more dominant Bitcoin is compared to the rest of the market. Often during an altcoin season, you’ll see Bitcoin dominance drop significantly, which often means money is flowing from Bitcoin into smaller projects.

Key Takeaways

• Bitcoin dominance shows what percentage of all the money in crypto is currently in Bitcoin.
• A high dominance may mean that Bitcoin is performing relatively better than altcoins, for example because people are selling their altcoins, or because altcoins are falling harder.
• If Bitcoin dominance drops, it indicates that investors are taking more risks and finding altcoins more interesting.
• By checking dominance occasionally, you get a good picture of market sentiment.
• Use it as a simple tool to make better portfolio decisions, but always consider other market news and data too.

Why Is Bitcoin Dominance Important?

That’s a good question. Because why should you, as an average investor, pay attention to these kinds of stats? The answer is simple: Bitcoin dominance shows you where the market confidence lies at that moment. And that confidence is constantly changing.

When Bitcoin dominance rises, it usually means that people are buying more Bitcoin and investing less in altcoins. You can’t see the reason for this through this statistic, but you can see that it’s happening. You can therefore conclude that if Bitcoin dominance is high, most people are actively trading Bitcoin. If you really want to find out how much this involves, you can always look at the volumes per cryptocurrency.

If that dominance is falling, people are often looking for alternatives. Investors then buy Ethereum, Solana, smaller projects, or even silly meme coins. That often happens when market confidence increases and people think altcoins could rise faster than Bitcoin.

A Real-Life Example

Imagine: you’ve been into crypto for a while and you have a portfolio with Bitcoin, Ethereum, and a few smaller coins. Then you notice that Bitcoin dominance suddenly jumps from 42% to 51%. What does that mean?

It probably means that a lot of people are selling their altcoins and moving into Bitcoin. Maybe they’re afraid of a crash. Or maybe there’s a major event, like new regulations, big companies buying billions worth of Bitcoin, or bad news about popular altcoins.

That’s a signal for you: the market is getting more cautious and altcoins are less popular for now. If you have a lot of altcoins, it might be the moment to consider whether you (maybe temporarily) move some to Bitcoin. Or not, if you think this is temporary and altcoins will soon rise again. Then you could see this as a great chance to buy more.

Is High Bitcoin Dominance Always a Good Thing?

No, not necessarily. It just means that Bitcoin currently has the largest share of the market. It says more about how people feel within the market.

Low BTC dominance also doesn’t mean things are going well—it might just be hype or an altcoin season. In the crypto market, money can move quickly; billions of euros can shift in minutes, which is why it’s good to check in on what’s happening from time to time.

What Can You Do with Bitcoin Dominance as an Investor?

As an investor, you can look at Bitcoin dominance and gauge how the market feels right now. It’s one of the few simple indicators that tells you how the market feels. Is the interest mainly in smaller altcoins or in Bitcoin? It’s a world driven by trust and emotion, and statements or actions from well-known figures or governments can greatly impact this market.

If you keep an eye on dominance, you can better assess where people are putting their money. That can help you, for example, to rebalance your portfolio, take profits in time, or hold off if everyone’s panicking.

When Should You Check Bitcoin Dominance?

Some people check Bitcoin dominance daily, just like they track their crypto prices. That’s not strictly necessary. It’s smart to check it occasionally, especially during times of market turbulence.

For example:

• If Bitcoin is skyrocketing and altcoins are lagging: is dominance rising? Then you know the focus is really on Bitcoin.
• If altcoins are suddenly pumping and everyone is talking about them: is dominance dropping? Then you see trust shifting to alternatives like Dogecoin, Solana, and other altcoins.
• If you’re unsure about a buy or sell decision, dominance might just give you that extra bit of insight.

What If You Combine It with Other Info?

That’s actually how most experienced traders do it. They don’t only look at Bitcoin dominance but combine it with:

• Charts and price movements (technical analysis)
• Total market capitalization (how much money is in the market)
• News and rumors (e.g., regulations, hacks, big announcements)
• Volumes (how much is being bought and sold?)
• Sentiment on social media (what are people saying on X, Reddit, or TikTok?)

Bitcoin dominance is like a compass, but it’s not the full map. You have to read it alongside other signals.

Where Can You See Bitcoin Dominance?

Now that you know what Bitcoin dominance is and why it can be useful to track, you might wonder where to find it. Luckily, you don’t need to be a pro trader for this—you can just find it online.

Two of the best-known websites where you can check Bitcoin dominance are CoinMarketCap and CoinGecko. Both sites give you a clear overview of the entire crypto market, including the percentage that currently consists of Bitcoin. Usually, that number is right at the top of the homepage.

Final Thoughts

Don’t be put off by the word “dominance”—it’s simply a way to see how much of the market is currently dominated by Bitcoin. It helps you understand where the market is heading, without needing to be an expert.

So whether you’re all-in on Bitcoin or prefer experimenting with altcoins, checking Bitcoin dominance now and then can help you make better decisions. We recommend always taking a critical look at multiple market factors and never relying on just one simple indicator. Always do your own research and remember that the crypto market can be highly volatile.