Bitcoin (BTC) dominance: what is this metric, and how can it be applied?
What is Bitcoin's (BTC) dominance?
Bitcoin Dominance is a market indicator that reflects the ratio of the capitalization of the main cryptocurrency, Bitcoin (BTC), to the same indicator of the entire crypto market. It is expressed as a percentage.
Bitcoin has become the first and foremost digital asset in the crypto market with the highest capitalization, which, as of February 2025, is already $1.7 trillion — more than Berkshire Hathaway, Tesla, or Walmart.
Bitcoin accounts for almost 60% of the capitalization of the entire cryptocurrency market — this is the level of Bitcoin's dominance. The capitalization share of the largest altcoin, Ethereum (ETH), is second in the overall cryptocurrency ranking at 9.9%, about six times less than Bitcoin's.
Due to BTC's strong dominance in the cryptocurrency market, investors even call BitcoinBitcoin a "market indicator" because, in case of significant price jumps, the value of altcoins often follows the rate of "digital gold".
What does Bitcoin's market dominance affect, and what is it used for?
Bitcoin's dominance level can signal various market trends and indicate investor sentiment. For example, depending on the level, the BTC dominance rate can indicate an alt season or a market correction (under certain conditions).
Look at the Bitcoin dominance chart, which can be found on the websites of popular monitoring services CoinMarketCap and CoinGecko. During periods of global correction in the crypto market, the BTC dominance level stays mostly below 50% and sometimes even drops below 40%.
Before a bull run or bullish growth of cryptocurrencies, the BTC dominance level increases and rises above 50%. For example, in November 2024, when Bitcoin hit a new all-time high, rising above $100,000, its dominance level rose to almost 60%. And at the end of 2020, right before the start of the alt season and the massive DeFi boom, BTC's dominance level rose to almost 70%.
A fall in Bitcoin's dominance, on the contrary, may indicate the beginning of the so-called altcoin season — a period when the growth rate of the first cryptocurrency either decreases or stops altogether while the value and capitalization of altcoins rapidly increase. As a rule, the altcoin season follows the bullish growth of the leading cryptocurrency. During periods of altcoin's alt season, bitcoin's dominance level typically drops below 50%.
This is because investors primarily invest their money in the leading cryptocurrency in the market. However, when the price of Bitcoin has already increased quite a lot, it is unnecessary to expect big profits from the first cryptocurrency. Then, investors are ready to risk more and "pour" their assets into altcoins.
In addition, you can notice a trend that as the crypto sector develops, BTC's level of domination decreases: if in 2017 this indicator exceeded 85%, then after the decline in 2018, it did not rise above 70%.
Analysts note that the overall decline in bitcoin dominance is a good sign for the crypto industry, as "the market is becoming more mature." BTC dominance is also called a "market maturity indicator."
Bitcoin dominance helps investors diversify their cryptocurrency portfolios and develop investment strategies. When Bitcoin dominance becomes very high (50% or more), investors consider diversification and start to consider buying other cryptocurrencies in their portfolio.
In their strategies, investors can decide to buy and sell assets based on Bitcoin's dominance rate. For example, they buy Bitcoin when its dominance rate is below 50% and sell it when it is above. Similarly, altcoins are often bought when Bitcoin's dominance is high and sold when it is low.
Conclusion
It's worth noting that bitcoin dominance is just one of the market metrics, and by itself, it may not reflect the complete picture of what's going on. Metrics such as BTC dominance work best when combined with other market metrics or indicators such as volumes, fear and greed index, etc.
It is also important to realize that BTC dominance should not be taken as a definitive indicator to get buy/sell signals for digital assets. The rise/fall in the value of cryptocurrencies is influenced by other factors, some of which cannot be known in advance, such as the outcome of the US presidential election or emergencies such as a pandemic.