Bitcoin's Dominance: A Power Balance Indicator in the Crypto World

Why follow the dominance of BTC?

In simple terms, this indicator tells you how much influence Bitcoin has in the entire crypto market. Currently, BTC's dominance is about 46%, which means that half of the total value of all crypto assets is concentrated in Bitcoin.

The algorithm is very simple:

• BTC market capitalization ÷ total market capitalization of all cryptocurrencies × 100% = dominance
• Current: 543 billion USD ÷ 1.18 trillion USD × 100% ≈ 46%

Historically, BTC once monopolized 100% of the market, but the emergence of Ethereum and other altcoins broke this pattern. However, even now with thousands of coins in existence, BTC's position remains as solid as a rock.

The Subtle Relationship Between Dominance and Coin Price

There is a reverse logic that needs to be clarified:

BTC dominance ↑ = Funds flowing from altcoins to Bitcoin = Increased market risk aversion = Bear market signal

BTC dominance↓ = Capital flowing into altcoins = Market greed sentiment is full = Altcoin season is coming

When the dominant position reaches a historical high, historical data shows that BTC is likely to decline afterward; the opposite is also true.

Four major factors manipulating dominance behind the scenes

1. Market Volatility (Most Critical)

It's common for the crypto market to drop by 50% overnight. But the key is that if the decline of altcoins is sharper than that of BTC, the dominance of BTC will actually increase—this is where your insight is truly tested.

2. Altcoin performance

Since the birth of Ethereum in 2015, the market landscape has changed completely. Every time there is a new popular track (inscriptions, AI, RWA), it takes away a portion of BTC's market value.

3. The Rise of Stablecoins

Stablecoins like Tether and USDC are becoming increasingly popular, especially during extreme market conditions. Investors prefer to hide in stablecoins to preserve their capital rather than risk being hurt by price drops. This directly suppresses BTC's dominance.

4. New cryptocurrencies influx

Every year, hundreds of new projects are launched, theoretically they are all eating into BTC's market share.

How do traders make money using this indicator?

Identifying Altcoin Season

When looking at the BTCDOM/USDT indicator on TradingView, a decline in dominance means that funds are searching for the next breakout point. This is often the best time to bet on small coins - conversely, when dominance rises significantly, it's time to return to the embrace of BTC.

Determine Extreme Market Conditions

• Dominance innovation high → BTC may have peaked
• Dominance hits a new low → The madness of altcoins may be coming to an end

You can use this data to decide when to increase your position and when to reduce it.

Is this indicator reliable?

To be honest, it's somewhat reliable.

It can reflect the general direction of market sentiment and capital flow, but it is by no means a hard-and-fast rule. The ecosystem of altcoins is constantly expanding, and the absolute value of dominant positions has been on a long-term downward trend. In the future, it may continue to be diluted.

Core Advice: Treat it as a reference, not as a bible. Using it in conjunction with candlestick charts, trading volume, and on-chain data will yield better results.

Frequently Asked Q&A

Q: How to view the BTC dominance chart? A: Both TradingView and CoinMarketCap have it. BTCDOM/USDT can also be traded directly on the futures market.

Q: What is the real dominance of BTC? A: Only benchmark against PoW coins (Litecoin, Dogecoin, Bitcoin Cash, etc.), ignoring other coins. This makes the benchmark purer.

Q: Can dominance predict bull and bear markets? A: It can reflect trends but cannot predict accurately. It must be used in conjunction with other tools.

Q: When is the altcoin season coming? A: When BTC's dominance starts to decline from a high position and the downward trend accelerates, altcoins usually take off.