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What is Bitcoin Dominance: How to Use BTCD to Trade Bull & Bear Markets

Key Points

Bitcoin Dominance (BTCD) measures Bitcoin’s share of the total cryptocurrency market cap, acting as a vital indicator of market sentiment. A rising BTCD signals Bitcoin’s dominance, often during market fear, while a falling BTCD indicates altcoin growth, known as "altseason." Driven by investor psychology, BTCD helps traders decide between Bitcoin and altcoins, with scenarios like Bitcoin bull markets or altcoin bear trends guiding strategy. 

Bitcoin Dominance (BTCD) refers to Bitcoin’s share of the total cryptocurrency market capitalization. In simple terms, it’s a measure of how much of the crypto market’s value is held in Bitcoin (BTC) versus all other coins, known as altcoins. This metric is a key indicator for crypto traders, as it reflects market sentiment and helps guide portfolio allocation. A rising BTCD often signals Bitcoin leading the market, while a falling BTCD can indicate money flowing into altcoins like Ethereum or Ripple. By understanding Bitcoin Dominance, traders can make informed decisions to capitalize on market trends. This guide explores what BTCD is, how to calculate it, its psychology, and how to use it in trading strategies.

What is Bitcoin Dominance?

Bitcoin Dominance (BTCD), also called the Bitcoin Dominance Index, represents Bitcoin’s market capitalization relative to the total market cap of all cryptocurrencies. In other words, it shows Bitcoin’s market share in the crypto ecosystem.

The basic principle is straightforward: if BTCD increases, the value of altcoins (all other cryptocurrencies, including Ethereum, Ripple, and Cardano) tends to decrease relative to Bitcoin. Conversely, if BTCD decreases, altcoins typically gain value faster than Bitcoin, signaling an “altseason.” For beginners, think of BTCD as a gauge of whether Bitcoin or altcoins are driving the crypto market’s momentum.

Bitcoin, created by Satoshi Nakamoto in 2008 and first mined in 2009, was the first cryptocurrency and initially held 100% market dominance. As altcoins emerged, Bitcoin’s dominance began to decline. In 2013, BTCD was still at 94%, but by 2017, it dropped to 40% as initial coin offerings (ICOs) and altcoins gained popularity. In February 2017, BTCD was 85.4%, with Ethereum (ETH) at 5.7% and Ripple (XRP) at 1.1%. By June 2017, BTCD fell to 40% as liquidity shifted to altcoins.

Today, Bitcoin’s dominance fluctuates around 58 (as of October 15 2025). A growing altcoin market share is often seen as a sign of a maturing crypto ecosystem, as new projects and participants create a more robust market.

How To Calculate Bitcoin Dominance

Bitcoin dominance (%) = BTC market cap ($)/ Total cryptocurrency market cap ($)

For example:
$1,161,096,644,198 / $2,625,952,307,009 = 44.21%

Bitcoin Dominance Chart

The Bitcoin Dominance chart, available on sites like CoinMarketCap, shows how much of the cryptocurrency market Bitcoin controls over time. This chart helps you see changes in Bitcoin’s share compared to other coins, like Ethereum and altcoins. For example, Bitcoin’s dominance can drop to around 50% or rise to about 65% over a year, depending on market trends. In the past, such as in 2018, Bitcoin’s share reached as high as 70% when other coins lost value. The chart provides a simple way to track these shifts, making it useful for understanding market patterns over time.

Bitcoin dominance chart on Coinmarketcap (source)

Psychology Behind Bitcoin Dominance

Why does Bitcoin Dominance fluctuate? The shifts often come down to market psychology and investor sentiment. When confidence in the crypto market is high, traders are more willing to invest in altcoins (which are generally viewed as riskier but potentially more rewarding than Bitcoin).
 
During these periods of optimism and speculation, money flows into smaller-cap coins, and Bitcoin’s dominance tends to drop. This is typically what we call an altcoin season – investors feel adventurous, chasing big gains in the latest trendy projects, causing altcoins to outperform Bitcoin for a time.
 
On the other hand, when fear or uncertainty is prevalent – perhaps due to bearish news, regulatory crackdowns, or market crashes – investors often retreat to the relative stability of Bitcoin. Bitcoin, being the oldest and most established crypto, is seen as the “safe haven” of the crypto world. In these times, people sell off altcoins en masse and pile into BTC (or sometimes into stablecoins), causing Bitcoin Dominance to rise.
 
There’s also a reflexive aspect to this metric. Traders watch BTC dominance charts as a sentiment indicator. If they see dominance rising, they may preemptively rotate out of altcoins, reinforcing the trend. Likewise, a sharply falling dominance might entice more traders to speculate on alts, further accelerating the altcoin rally. Psychologically, Bitcoin Dominance represents the tug-of-war between greed and fear in crypto markets. Greed drives diversification into smaller coins for higher returns (reducing dominance), while fear drives consolidation back into Bitcoin (increasing dominance).
 
Additionally, the concept of the “flippening” – the idea that some other coin (most notably Ethereum) could overtake Bitcoin’s market share – has long captured the imagination of the crypto community. While Ethereum has grown in market share over the years, Bitcoin has so far maintained the top spot. However, even speculation about a potential flippening can influence investor behavior, as big shifts in dominance are seen as milestones in crypto history.

How To Use Bitcoin Dominance To Trade

Bitcoin Dominance can be a powerful tool for formulating trading strategy. By interpreting dominance alongside price movements, traders can infer which sector of the market (Bitcoin or altcoins) is likely to outperform and adjust their positions accordingly. Here are some trading scenarios using BTC dominance as a guide:

  • Scenario 1: BTC Dominance Rising + Bitcoin Price Rising – Bitcoin Bull Market.

    If you observe that BTC’s dominance is climbing while Bitcoin’s own price is also climbing, this typically indicates a Bitcoin-led bull run. Money is flowing primarily into BTC.

    In this scenario, a trader might focus on accumulating Bitcoin itself, since it’s leading the market. Altcoins may still be rising, but usually not as fast as BTC.

    The strategy here: Consider buying Bitcoin or maintaining an overweight BTC position, because Bitcoin is likely to continue outperforming the broader market as long as this trend holds.

  • Scenario 2: BTC Dominance Rising + Bitcoin Price Falling – Altcoin Bear Trend.

    If Bitcoin’s dominance is increasing even though BTC’s price is declining, it suggests altcoins are bleeding out more severely (relative to Bitcoin).

    This often occurs in early bear markets or during market panics, where investors flee to Bitcoin or to cash, abandoning smaller coins.

    In this scenario, it might be wise to scale back altcoin positions or even hold more stable assets, since altcoins are likely to be in a harsher downtrend. One who holds mostly Bitcoin will see their portfolio drop less than someone heavy in alts during these phases.

  • Scenario 3: BTC Dominance Falling + Bitcoin Price Rising – Altcoin Bull Market (Altseason).

    This is an interesting case that usually signals an altcoin-driven rally. Bitcoin’s price might be going up, but its dominance is slipping, meaning altcoins (perhaps led by Ethereum or others) are rising even faster than Bitcoin. This is the classic “altseason” signal.

    In such times, traders might allocate more into high-quality altcoins, as these could yield larger percentage gains. Bitcoin is still doing well (so the overall market sentiment is bullish), but the bigger opportunities short-term might lie in major altcoins, DeFi tokens, or other trending sectors. It’s during these periods that you see many lower-cap coins skyrocketing – but also remember that they can be volatile, so risk management is key.

  • Scenario 4: BTC Dominance Falling + Bitcoin Price Falling – Market-Wide Bearishness.

    If both Bitcoin’s price and its dominance are dropping together, that’s often a sign of a broad market downturn where investors are exiting crypto in general (possibly moving to fiat or stablecoins). Altcoins might be falling hard (reducing BTC’s share somewhat), and even Bitcoin is declining significantly.

    In this case, trading strategy tends to become defensive. Consider taking profits into stablecoins or fiat, or hedging positions. It might be time to reduce exposure across the board because the entire market is in a bear phase. At minimum, it’s a signal to not rely on any crypto asset doing well – even Bitcoin – until conditions improve.

Using Bitcoin Dominance in your analysis adds an extra layer of insight. It’s particularly useful for timing rotations between Bitcoin and altcoins. For instance, a trader might use dominance to decide when to shift profits from altcoins back into Bitcoin or vice versa.
 
Let’s say you enjoyed a big run-up in some altcoin positions and you notice BTC dominance has hit an unusually low level (meaning altcoins have had a huge run relative to BTC). That could be a cue that the cycle may soon swing back and you might start shifting some capital into Bitcoin, expecting BTC to strengthen next.
 
In essence, Bitcoin Dominance helps you gauge the market’s risk appetite and position yourself accordingly. Just remember, it’s not a timing tool on its own – rather, it’s a context indicator best used alongside price analysis and other indicators.

Trading Bitcoin Dominance (source)

Limitations of Bitcoin Dominance as Trading Indicator

Bitcoin Dominance is a helpful metric, but it has limitations. It is a relative measure, meaning Bitcoin’s dominance can decrease even if its price rises - if altcoins perform better. A falling dominance isn’t necessarily bearish for Bitcoin in absolute terms. Conversely, rising dominance might suggest Bitcoin is faring better in a market downturn, where prices are generally falling.
 
The composition of the total market cap also impacts dominance. The influx of new tokens, especially during bull markets, can reduce Bitcoin's market share without any fundamental change in its value. Additionally, the rise of stablecoins can inflate the total market cap without reflecting speculative interest in altcoins. Some analysts adjust dominance metrics by excluding stablecoins for clarity.
 
Market conditions such as strong bullish phases or macroeconomic crises can render dominance less informative, as both Bitcoin and altcoins may move together. Factors like interest rates, stock trends, and geopolitical events impact the entire crypto market.
 
It's essential to consider your trading horizon; dominance shifts significant for long-term investors may not help short-term traders. Use Bitcoin Dominance as one of several tools for understanding market rotations, but combine it with other indicators like price action and volume for better decision-making. In summary, while Bitcoin Dominance provides insights, its context and limitations should be carefully considered.

What Is The Flippening? Will Ethereum Merge Finally Trigger It?

The “flippening” is a term used for ETH overtaking BTC. Although perhaps never reaching its pre-2017 heights again, many believed that BTC would remain the dominant crypto.
 
However, during 2017, with the rise of ETH, opinions started to change as BTCD decreased and Ethereum dominance (ETHD) increased. By June 2017, BTCD had 37.84% of the market and ETHD had 31.17%. It was a close race but BTC held strong.

ETH to BTC ratio

ETH/BTC is the ratio of how much Ethereum is worth compared to Bitcoin. The higher the ratio, the more dominant ETH is.
 
While Bitcoin was created as an alternative type of money to the fiat currencies we currently use, Ethereum provided a platform for various other decentralized applications (DApps), from financial services to gaming, art and infrastructure tooling for the blockchain ecosystem. As such, Bitcoin’s market dominance has decreased over the years as more people know about DApps and altcoins become more widely adopted.
 
ETHBTC chart on Coingecko (source)

What Is the Flappening?

The “flappening” is a term used for Litecoin (LTC) overtaking Bitcoin Cash (BCH). It is similar to the “flippening” term, which has also been coined for similar situations in the cryptocurrency field. As Litecoin came close to Bitcoin Cash, LTC’s founder Charlie Lee tweeted that LTC would overtake BCH’s market domination in the “flappening.”

Is Bitcoin Dominance A Good Indicator for the Crypto Market?

Market dominance, and especially Bitcoin dominance, is a great indicator for crypto investors to choose where to allocate their funds, as well as when to invest and when to sell. However, and we cannot emphasize this enough: BTCD cannot be used in isolation. With cryptocurrency gaining status as a newfound asset class among institutional investors, macro factors such as geopolitical instability, interest rate hikes and inflation come into play and should be taken into consideration when making trading decisions as well.

Conclusion

Bitcoin Dominance is a valuable indicator for any crypto trader’s arsenal. It encapsulates the evolving story of market preference: risk-on versus risk-off, Bitcoin versus the field. By understanding what a rising or falling dominance means, you can anticipate broad market movements and adjust your strategy to capitalize on those shifts. 

If you’re ready to put your Bitcoin Dominance insights into action, having a suitable trading platform can be helpful. Phemex offer options to trade spot and futures markets for Bitcoin and various altcoins, with advanced trading tools and even automated trading bots that may assist in navigating market shifts. Mastering Bitcoin Dominance can provide valuable perspective, and staying informed while monitoring market trends can support your trading decisions. Stay educated, stay vigilant, and may your trading decisions be ever in tune with the market’s rhythm!

FAQ: Bitcoin Dominance Explained

1. Why does Bitcoin Dominance matter?
BTCD reflects market sentiment, showing whether Bitcoin or altcoins are leading. It helps traders allocate funds based on market trends.

2. How often should I check Bitcoin Dominance?
Check BTCD weekly for long-term trends or daily for short-term trading. Use tools like CoinMarketCap for real-time updates.

3. Can Bitcoin Dominance predict market crashes?
While not a crystal ball, rising BTCD during a Bitcoin price drop often signals an altcoin bear market, indicating broader market weakness.

4. What tools can I use to track Bitcoin Dominance?
Use CoinMarketCap, CoinGecko, or TradingView for BTCD charts and data.

 

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