Bitcoin dominance is a key indicator that attracts the attention of many investors and cryptocurrency market participants. This indicator represents the share of bitcoin's market capitalization relative to the total capitalization of all cryptocurrencies. Understanding bitcoin dominance is important for investors and traders, as it can provide insight into how bitcoin affects the entire cryptocurrency market and what trends can be expected in the future. In this article, we'll look at why it's important to keep an eye on bitcoin dominance and how this indicator can improve your trading and investing results.

Bitcoin Dominance, denoted on charts as BTC.D (Bitcoin Dominance) is an index that measures the share of bitcoin's market capitalization relative to the total market capitalization of all cryptocurrencies, the index is expressed as a percentage.

The history of the term is linked to the development of the cryptocurrency market and the rise of alternative cryptocurrencies called altcoins. At the beginning of the cryptocurrency era, bitcoin was the only cryptocurrency, and its dominance accounted for 100% of the market capitalization of cryptocurrencies. However, with the passage of time, new cryptocurrencies such as Ethereum, Ripple, Litecoin and many others have emerged.

With the emergence of altcoins, the market started to diversify and investors started to pay attention not only to bitcoin but also to other cryptocurrencies. This led to a decrease in bitcoin's share of the total market capitalization. To track this share, the BTC.D indicator was introduced.

Bitcoin dominance is important for several reasons:

• It reflects the difference in interest between the cryptocurrency community towards Bitcoin and altcoins.
• It allows investors and traders to assess how consistently Bitcoin holds its position in the market. It also helps to locally evaluate who is stronger and who is weaker, and how much stronger or weaker Bitcoin is relative to altcoins.
• It helps forecast trends in the cryptocurrency market and assess whether altcoins are currently competitive and viable for buying. However, Bitcoin dominance alone cannot determine which altcoins are promising.

It's important to understand that Bitcoin dominance is just one of many factors affecting the dynamics of the cryptocurrency market, and it should be considered in conjunction with other tools and chart analysis. Nevertheless, this indicator remains a valuable tool for cryptocurrency analysis and decision-making in the world of cryptocurrencies.

ЧТО ВЛИЯЕТ НА ДОМИНАЦИЮ БИТКОИНА?

Let's consider the factors that influence Bitcoin dominance and shape this important metric in the cryptocurrency market.

Bitcoin Price

The price of Bitcoin plays a crucial role in determining BTC dominance, and here's why:

1. Market Capitalization Leadership: Bitcoin, being the first and most well-known cryptocurrency, has the highest market capitalization among all cryptocurrencies. When the price of Bitcoin rises, its market capitalization also increases, leading to an increase in Bitcoin's share of the overall cryptocurrency market.
2. Psychological Effect: The price of Bitcoin often becomes news, attracting mass audience attention and boosting interest in cryptocurrencies in general. This can also contribute to an increase in Bitcoin's market share.