Today, we are going to talk about Bitcoin Dominance and its relation to Altcoin?
If you divide the total market capital of Bitcoin by the total market capital of all cryptocurrencies and multiply the value by 100, you get Bitcoin Dominance . You can find the dominance of any coin by doing the same step.
When writing the book , the BTC dominance is at 64 % and has started reaching a resistance zone. ETH dominance is at 11 % , and Tether’s dominance is at 4 from this zone will be good for altcoins.
Although thousands of different currencies Bitcoin’s dominance has been above 50 % for most of the decade.
WHAT HAPPENS WHEN BTC DOMINANCE INCREASES OR DECREASES
When BTC dominance increases, the demand for BTC increases and that for altcoins decreases. When BTC dominance decreases, the demand for altcoins increases and that for BTC decreases.
When BTC dominance increases, investors in crypto are looking for a less volatile and safer investment. It is analogous to buying A – list stocks or YEN in forex or Gold in commodities. During market uncertainty , investors shift towards less volatile and highly liquid assets like BTC rather than investing in altcoins with low liquidity and market cap.There are multiple rea sons for the high dominance of BTC, which include : the earliest digital asset, listed across all exchanges, completely decentralized, extreme media attention,etc. This is why most cryptocurrency traders have begun their journey with BTC as the first cryptocurrency.
When BTC dominance decreases , it indicates the beginning of the alt season . It is an indication that the profits earned from the rise in the BTC price will now be used to buy altcoins. A falling BTC dominance is a good sign for altcoins. Altcoins have a much higher probability of exponential gains given their low liquidity and high volatility compared to BTC . For example, it is far more likely for an altcoin like BAND to jump from 5 USD to 15 USD in a much shorter time frame than for BTC to jump from 10,000 USD to 30,000 USD in the same time frame.
