Bitcoin dominance, also known as BTC.D or BTC dominance, is calculated by comparing the market value of bitcoin to the combined market value of all other cryptocurrencies. Many crypto investors and traders rely on bitcoin dominance to make informed decisions about their trading strategies and portfolio allocations.
Bitcoin, the first cryptocurrency, has maintained its position as the largest digital asset by market capitalization, despite the existence of numerous altcoins. Traders have noticed consistent patterns in the market conditions by observing the dynamics of bitcoin’s share in the overall crypto market. As a result, many traders use BTC dominance as a reference for their trading decisions, as it is believed to provide valuable information about the current market trend.
BTC.D & market capitalization
Market capitalization is the total value of an asset in circulation. To calculate the market cap of bitcoin, multiply the current price by the number of BTC mined.
You can calculate bitcoin dominance with this formula: Bitcoin dominance = Bitcoin market cap/ Total cryptocurrency market cap
Factors that impact BTC market share
- Changing trends
- Bull or bear market
- On-ramping via stablecoins
- Emergence of new coins
Using BTC.D in trading
- Wyckoff Method
- Using BTC dominance to spot altcoin season
- Using BTC dominance with current bitcoin price
Conclusion
BTC dominance is a useful tool for understanding market cycles. Traders can adjust their strategies or manage their portfolios with this information. Keep in mind that BTC dominance is not a guarantee of bitcoin’s performance, but it can assist traders in planning their approach.