Bitcoin dominance is the ratio of Bitcoin’s market cap to the total market cap of all cryptocurrencies, indicating its market share and relative influence in the crypto sphere.
Understanding Bitcoin Dominance
Bitcoin dominance is a term that reflects the scale of Bitcoin’s market cap relative to the total market cap of all cryptocurrencies combined. It’s a measure of Bitcoin’s market share and its influence over the crypto market.
What is Bitcoin Dominance?
Essentially, Bitcoin dominance measures the weight of Bitcoin in the cryptocurrency universe. Initially, Bitcoin was the only player, claiming nearly the entire market. Over time, with the rise of alternative cryptocurrencies, or altcoins, Bitcoin’s dominance has seen ups and downs.
- Bitcoin dominance increases when Bitcoin outperforms altcoins.
- It decreases when altcoins gain more market share.
Yet, this metric doesn’t directly tie to Bitcoin’s inherent value or indicate sudden shifts in investment.
How is BTC Dominance Calculated?
The calculation of BTC dominance hinges on two components:
- Bitcoin’s market cap, which is the product of its current price and circulating supply.
- The market cap of all cryptocurrencies.
Bitcoin Dominance (%) = (Bitcoin Market Cap / Total Market Cap) x 100
For example, if Bitcoin’s market cap is $1 trillion and the total market cap of cryptocurrencies is $3 trillion, then Bitcoin’s dominance would be 33.33%.