Bitcoin Dominance Definition

While there is a variety of cryptocurrencies out there, Bitcoin is the oldest, largest, and most influential one. Given BTC’s size and reputation, many investors use the Bitcoin dominance ratio as a criterion to guide their trading behavior. Find out what exactly it is and how to calculate it below!

What Is Bitcoin Dominance? 

Bitcoin dominance is the measure of BTC’s share in the total value of all cryptocurrencies globally. It is an indicator that is often used to gain insight into the current general market trend and make trading decisions.

What You Need To Know About Bitcoin Dominance

The Bitcoin dominance definition is interconnected with the term “market cap”, which refers to the value calculated by multiplying the current coin price by its circulating supply. 

To determine the Bitcoin dominance ratio, you need to know BTC’s current market cap as well as the overall crypto market cap. For example, if there are 19,231,918 BTC in circulation and its current value is $17,899.70, it means that its market cap will be:

19,231,918 * $17,899.70 = $344,245,562,624.6

Let’s say that after performing a similar multiplication or using a dedicated calculator you find out that the total crypto market cap equals $874,325,259,553.

With this data at hand, you can proceed to determine the Bitcoin dominance ratio with this formula:

Bitcoin market cap / Total cryptocurrency market cap = Bitcoin dominance 

In the example mentioned above, the BTC dominance ratio would equal 39%. This means that Bitcoin accounted for 39% of the global cryptocurrencies when the calculation was performed.

There are multiple ways to implement Bitcoin dominance to an investor’s advantage. One of the most common strategies is to use it to determine if BTC is the stronger trend or if investing in altcoins has greater potential at a specific moment. As a rule of thumb, the trading decision will follow the logic below: