BTC dominance = Bitcoin's market cap ÷ the total crypto market cap. Rising dominance means Bitcoin is outperforming the rest of the market, which often happens early in bull phases and in risk-off periods. Falling dominance means altcoins are gaining on Bitcoin, the condition traders call altcoin season. Stablecoins are part of the total, so their growth also lowers dominance.
Example
The total crypto market cap is $2.4 trillion and Bitcoin's is $1.32 trillion, so dominance is 55%. Over a month Bitcoin rises 5% to $1.386 trillion while the rest of the market falls from $1.08 trillion to $1.02 trillion. The total is now $2.406 trillion and dominance has risen to about 57.6%.
Why it matters
Dominance helps you decide where to focus. While it is rising, many altcoin longs underperform even when BTC goes up, so traders often stick to BTC or short weak altcoins. When it falls steadily, altcoin setups tend to work better.
Common mistake
Treating the dominance chart as a trading signal on its own. Dominance can fall because altcoins rise or because Bitcoin drops faster than they do. Check what is moving the ratio before you act on it.
FAQ
- What does high Bitcoin dominance mean?
- Bitcoin holds a large share of total market value, usually because investors prefer it to riskier altcoins at that moment.
- What is altcoin season?
- A period when most altcoins outperform Bitcoin, usually seen as falling BTC dominance during a broad rally.
- Do stablecoins affect BTC dominance?
- Yes. They are part of the total market cap, so when their supply grows, dominance falls even if Bitcoin and altcoins are flat. Some traders watch a version that excludes stablecoins.