Bitcoin Dominance Meaning
What is Bitcoin Dominance?
Bitcoin dominance (also called BTC dominance or BTCD) is a metric for the relative share of Bitcoin compared to the overall cryptocurrency market.
At one point, Bitcoin commanded close to 100% share of the cryptocurrency market. BTC dominance significantly plummeted with the advent of new altcoins on the global crypto market. Bitcoin dominance declines when altcoins amass a larger portion of the crypto market, and appreciates when Bitcoin performs better than altcoins. However, fluctuation in this metric does not necessarily correlate with its intrinsic value, nor does it imply a rapid capital inflow. Instead, it is simply a metric based on Bitcoin’s current price and its circulating supply.
Since BTCD is a ratio and not an absolute value, it is often not directly influenced by bullish or bearish trends. If the value of Bitcoin declines or appreciates at a similar rate as altcoins, the ratio will likely remain unchanged, even if Bitcoin’s value fluctuates. However, if the value of Bitcoin decreases while that of altcoins increases or remains the same, Bitcoin’s market share percentage is likely to drop.
How is BTC Dominance Calculated
BTC dominance is made up of two factors: Bitcoin’s market capitalization or market cap, and the global crypto market cap. It simply represents the percentage of Bitcoin’s market capitalization versus the total crypto market cap. It is calculated by dividing Bitcoin’s market cap by the total market cap of all cryptocurrencies.
Bitcoin Market Cap (%) = Current Market Price x Circulating Supply
Bitcoin Dominance = Bitcoin Market Cap / Total Market Cap x 100
For instance, say Bitcoin’s market cap is $1 trillion, and the total cryptocurrency market cap is $3 trillion. Bitcoin’s dominance would be 33.33% because Bitcoin accounts for a third of the entire crypto market’s value.
