Introduction
Bitcoin (BTC) is not only the original cryptocurrency, but it is also the market leader and sets the tone for the crypto market as a whole. One of the most important indicators traders look for is Bitcoin Dominance (BTC.D). It measures how much of the total value of the entire crypto market is in Bitcoin.
When Bitcoin’s dominance is rising or falling, it creates ripple effects across altcoins and triggers opportunity or disaster for investors. In this article, we will take you through:
- What does Bitcoin Dominance mean for traders?
- Why do altcoin strength or weakness depend on BTC strength?
- What do historical correlations tell us?
- What can we expect in the current market cycle?
1. Bitcoin Dominance: The Crypto Power Struggle
Bitcoin Dominance is the measure of Bitcoin’s share of the entire cryptocurrency market. If BTC Dominance is growing, it means Bitcoin is outperforming the altcoins. If BTC Dominance is decreasing, then the altcoins are outperforming.
- High BTC Dominance ** (above 50%) → Investors see Bitcoin as the safer choice and altcoins suffer.
Low BTC Dominance ** (below 40%) → The altcoins experience massive runs (aka, “Altseason”).
2. Bitcoin’s Power and Influence Over Altcoins
What Makes Bitcoin Dominance Rise (Altcoins Fall)
– Money moves out of altcoins and into Bitcoin.
– This usually happens in:
- Market fear (crash, regulations and fear of exchanges failing)
- Bitcoin news (ETF approvals, institutional adoption)
- Really early new bull runs when BTC is leading the way
What Makes Bitcoin Dominance Fall (Altcoins Boom)
- Money goes into riskier altcoins. Investors are taking profits off Bitcoin and chasing higher-risk Altcoins.
- This typically happens from here on includes:
- After Bitcoin has just stabilized after a monster rally in price
- New trends (DeFi, NFTs, AI tokens, and memecoins)
- Extreme greed in the market (retail FOMO)
3. Past Cycles This Tells Us
- 2017: BTC dominance dropped from 80% to 35%, this led to an insane altcoin boom (ICOs, ETH, XRP)
- 2021: After Bitcoin peaked around $64K, BTC’s dominance was falling and we saw massive Altcoin movement like Solana (SOL), Cardano (ADA) and Dogecoin (DOGE) go crazy to appreciation.
- 2024: After the Bitcoin halving, will we see something similar again if BTC dominance drops?
4. What is Next for Bitcoin & Altcoins?
Currently (mid 2024), BTC dominance is around **[current % – coin gecko],** here are a few factors that could change things:
- Bitcoin ETF’s → If institutional money is dominating cash into BTC, BTC will have higher dominance.
- Potential Ethereum ETF Decisions → Ethereum approval could provide an alt-coin move higher.
- Macroeconomic/Rate environment → Rates cut during the cycles mean higher risk Altcoins.
5. Trading Based on BTC Dominance
- BTC.D is going up? → Stay in bitcoin or stablecoins and avoid the weak alts.
- BTC.D is going down? → Look at high volume alts with strong narratives.
- Extremely low dominance (<40%)? → Potentially an altcoin bubble.
Conclusion
Bitcoin Dominance is not just a number. It represents the struggle between safety and risk. Alts will bleed when bitcoin is strong, but alts can rally when bitcoin cools off. Smart traders keep a close eye on this metric to help them time their trades.
When do you think altcoins will have a year. Do you think 2025 is it? Or is bitcoin here to stay? Let me know below!
