What is bitcoin dominance

Bitcoin Dominance is the ratio of the market cap of Bitcoin to the total market cap of all cryptocurrencies. Bitcoin is the first and largest cryptocurrency by market capitalization. Altcoins are cryptocurrencies other than Bitcoin. The increase in the number of altcoins sometimes affects Bitcoin dominance.

Bitcoin dominance is used to predict altcoin season or alt-season where most of the money flows from Bitcoin to altcoins. Bitcoin dominance can be used to switch between bitcoin and altcoin trading and can be used to time your altcoin strategies.

You can check the Bitcoin dominance in the chart below. Bookmark this site to check the bitcoin dominance whenever you want.

Bitcoin was created in 2009. There wasn't another cryptocurrency until 2011 when Litecoin was created. Ripple(XRP) came in 2013 and Ethereum(2015). There were many other cryptocurrencies created in between but many of them went to zero and do not exist anymore.

Bitcoin Dominance was started in 2012 and it was at about 95% as there weren't many cryptos back then. As new cryptocurrencies kept coming the bitcoin dominance also kept decreasing. After the introduction of Ethereum and ERC-20 standard, creating new cryptocurrencies had become way too easy.

The ICO boom of 2017 has led to the fall of Bitcoin dominance from over 85% to 37% in the span of four months. Bitcoin dominance hit an all-time low of 32% in 2018 during the crypto bear market. However, the bitcoin dominance rebound in the subsequent years to reach 69%. The bitcoin dominance is just over 41% at the time of writing this article.

Bitcoin Dominance: Impact on Altcoins

While an isolated Bitcoin dominance percentage cannot say much about the altcoin trend but combined with the price of Bitcoin, the trend of altcoins can be predicted.

Bitcoin Dominance Bitcoin Price Altcoins
Increases Increases Decreases
Increases Decreases Decreases Fast
Increases Stable Stable
Decreases Increases Increases Fast(Alt Season)
Decreases Decreases Stable
Decreases Stable Increases

So to make money in altcoins, you have to check if the Bitcoin dominance is decreasing and in a downtrend and the price of Bitcoin is in an uptrend. The money first flows from Bitcoin to big cap altcoins like Ethereum and other altcoins which are in the top 10 at that time.

It is better to stay away from altcoins when the Bitcoin dominance is increasing and is in the uptrend. It can really hurt your portfolio if you are invested in altcoins. Because as bitcoin dominance increases and the bitcoin price decreases, it can be the start of a crypto bear market and most of the altcoins can lose more than 90% of their value.

Bitcoin dominance chart analysis

In the short history of cryptocurrencies, we can see Bitcoin dominance was in a huge downtrend in 2017 and that's when there was a massive altcoin season which lasted until 2018.

Bitcoin dominance bottomed in 2018 and kept on increasing until late 2020 when Bitcoin went past the previous all-time high and many altcoins have given stellar returns to the investors in 2021.

Bitcoin dominance is going sideways for a few months and the bitcoin price hasn't changed much from March 2021 to March 2022. We cannot depend on Bitcoin dominance on trend analysis when it is going sideways. Only when there is a sustained downtrend or uptrend, we can predict the market direction.

With more programmable blockchains coming up, the number of altcoins is definitely going to increase. But most of the coins issued are just forks of platforms on other blockchains. The real value lies in the utility of these platforms. If there is utility it is going to last longer.

As you know, most of the altcoin projects from 2017 do not exist now, and many altcoins which topped out in 2017 didn't reach their all-time highs again. And many projects have abandoned their projects and roadmaps completely. Only a few projects will keep on building and survive through a bear market.

Do your own research and invest wisely.

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