Educational Post:
What is BTC Dominance? And its relationship with Alts and BTC
Bitcoin dominance, or BTC dominance, is measured as the ratio of the market capitalization of bitcoin to that of the rest of the cryptocurrency market. Some crypto investors and traders use bitcoin dominance as a guide to adjust their trading strategies and portfolio structures.
BTC dominance and market capitalization
In simple terms, market capitalization refers to the total value of a certain asset in circulation. For bitcoin, the market cap is calculated by multiplying the current price and the number of BTC that have been mined so far.
You can calculate bitcoin dominance with this formula:
Bitcoin dominance = Bitcoin market cap/ Total cryptocurrency market cap
Here is the relationship between Bitcoin Dominance, BTC price and altcoins.
If dominance increase with price then we see a dump in altcoins.
If dominance increases and price decreases then we see a heavy dump in altcoins.
If dominance decreases and price increases then we see a big pump in altcoins.
We have covered all scenarios in the image, have a look at that.
