What is Bitcoin Dominance
Bitcoin dominance, which means the dominance of the Coin Market is used to measure the size of the money in the market. To measure the market dominance of a currency the formula (Market size of the currency / Total size of the market) is used.
For example; Let the market value of the coin be 500 billion dollars. Let the total value of the market be 1 trillion dollars. If we use the formula (500 billion dollars / 1 trillion dollars) to calculate the dominance of our coin, we can see that it accounts for 50% of the total market and the market dominance is 50%.
Bitcoin dominance, indicates how much of the total market Bitcoin dominates. As we have given in the previous example, if the market value of Bitcoin is $ 1 trillion and the total market volume is $ 2 trillion, Bitcoin dominates 50% of the total market.
For altcoins to rise quickly, Bitcoin’s price must rise while its dominance falls. As Bitcoin rises, if its dominance rises proportionally, this time altcoins will begin to decline. The reason for this is that there is an outflow of money from altcoins and the money the flow to Bitcoin.
If you want to look at the dominance of Bitcoin, you can use websites such as https://www.tradingview.com/ or https://coinmarketcap.com/. Example: On https://www.tradingview.com/, you can type BTC.D in the search field.
Why Bitcoin Dominance Rate Matters?
Among the most talked about topics among cryptocurrency users is the issue of market dominance of Bitcoin.The rise in Bitcoin dominance may indicate that investors have increased confidence in Bitcoin. On the other hand, the increase in the Bitcoin dominance rate also means that altcoins are losing blood.
According to most investment experts, the increase in Bitcoin dominance is interpreted as the first signs of the bull season. This also means that the prices of altcoins in BTC parity melt. In other words, the direction of money is shifting from Altcoins to BTC according to the current dominance rate.
This article is definitely not investment advice. I hope you enjoyed our post. If you like this article, do not forget to comment.