Understanding BTC Dominance, are you familiar with the concept of “BTC dominance” in cryptocurrencies? With the launch of new tokens and coins nearly every day, the financial world of cryptocurrencies is expanding quickly. Bitcoin is the most popular crypto-currency and has the highest market capitalization. Alternative coins are posing a threat to BTC’s dominance as the market develops. The percentage of Bitcoin’s total crypto market cap is known as Bitcoin dominance. This article will explain, what is BTC dominance and why it is important for cryptocurrency investors and traders.
What is BTC Dominance?
In April 2023, as I am writing this article, Bitcoin dominance is 46% approximately. The total market cap of BTC will be the percentage of the market capitalization of all cryptocurrencies, which is called BTC’s dominance. There is a simple formula to calculate BTC dominance.
BTC Dominance = {Bitcoin Market Cap / Overall Crypto Market Cap} X 100
BTC Dominance = {568,935,784,311 / 1,250,000,000,000} X 100
BTC Dominance = {45.5148627}
As Bitcoin’s dominance increases, traders and investors can track the crypto market’s position and make future price predictions for other cryptocurrencies. When investors and traders are interested in putting money into Bitcoin, it dominates the other cryptocurrencies. As a result, high Bitcoin dominance suggests that Bitcoin is getting investments rapidly compared to altcoins, whereas low Bitcoin dominance indicates that altcoins are surpassing Bitcoin.
Crypto Market Overview
When Bitcoin started in 2009, its price was less than $1 (one dollar). From April 2011 to January 2017, it increased from $1 to $999. The price of Bitcoin transited $1000 in February 2017 and acquired its all-time high, which was 67.9K dollars, in September 2021, during the covid-19 days. When the coronavirus engulfed the world, people were restricted to their houses, and businesses crumpled.
Due to these circumstances, the supply and demand of cryptocurrencies inflated, which is why the entire crypto market evolved. Bitcoin is a stronger trend setter but Ethereum has also its impact; because Ethereum is only the coin other than BTC that also has its dominance, which is 19% as of the date I write this article in April-2023.
Why did the crypto market crash (2022)?
Multiple significant events caused Bitcoin’s total value to plummet to the point where BTC would have only been worth half of its all-time high. For example, A popular blockchain called Luna, crashed in May 2022, sending the crypto market into a tailspin and badly affecting trader and investor sentiment.
During these days, another issue that jolted the market was the regulatory situation in China and the other issue has happened that was Elon Musk’s (Tesla CEO) decision to stop accepting Bitcoin as payment for its vehicles. Now, the Bitcoin network and altcoins are desperately trying to recover their positions.
Current Market Conditions – Understanding BTC Dominance
Explaining the current market conditions, let’s talk about BTC’s current market price first. Bitcoin touched a price of $30,000 in April 2023, and the global crypto market cap has exceeded $1.20 trillion. The crypto market slumped the previous year but has been recovering significantly recently. Many factors influence the growth of the entire crypto market but solely relying on Bitcoin dominance is not appropriate.
For example, BTC was pressured to buy $300 million because it had short positions worth $300 million, which would have been eliminated with this purchase. At the same time, Binance contributed to the current market spike by converting $1 billion (BUSD) into ETH, BTC, BNB, and further unknown cryptocurrencies. Another factor contributing to the present market boom is the official revelation of the new Ethereum Shanghai hard fork, which would enable users to remove their ETH staking and is likely to boost the demand for Ethereum.
Crypto Market Capitalization
Crypto-currency market capitalization means, the sum of all the crypto tokens and coins’ capital that is listed on CoinMarkeCap. Several websites provide comprehensive information regarding overall cryptocurrencies’ capitalization, but CoinMarketCap is the most popular. You can check the global crypto market cap daily on this website and other details like coin news, price movements, 24-hour volume changes, and coins’ charts. Crypto market capitalization can shed light on the condition of the overall crypto-currency market, its size, and trends in investor sentiment and beliefs. When choosing crypto investments, investors should also consider additional metrics such as trading volume, liquidity, capacity, and adoption rates.
Bitcoin Dominance & Coins in Circulation
Bitcoin dominance dropped in March 2023 compared to earlier months because people’s risk appetite and confidence have grown in altcoins, and they are investing more in Ethereum, Binance, and XRP. In April 2023, Bitcoin’s dominance over these cryptocurrencies has been declining steadily; according to available data on CoinMarketCap, Bitcoin’s dominance was around 46%, and ETH’s dominance was 19%, which is very low compared to the past.
The circulating supply of Bitcoin is 21 million coins maximum, and 19 million BTC have already been mined. The circulating supply of Ethereum will be 18 million per year, there are no restrictions on the total supply. Thousands of cryptocurrencies have been launched to date and they have different circulation supplies and mining schedules. Before trading or investing in cryptocurrencies, it is essential to research their supply dynamics. The concept of burning coins has been introduced to manage the price of the respective coin and is burned periodically to reduce the total supply.
Non-Fungible Tokens (NFTs) Impact on the Market
Non-Fungible Tokens have had an impact on cryptocurrencies since they launched in the crypto-currency market. NFTs are a particular type of digital art that is quite popular nowadays and has a significant market cap. NFTs cannot be transferred like traditional cryptocurrencies because they have distinct identities and are traded separately. This digital art is increasingly used to earn money in sports, social media, and games. However, if we talk about the impact of NFTs on the overall crypto space, it still needs to be clarified because experts who understand the crypto space have their own opinions.
Some cryptocurrency experts think that NFTs are merely speculative and that their reputation has yet to be worthwhile and are riskier assets, which does not significantly impact the crypto-currency market. While some other cryptocurrency experts think that NFTs are a new type of digital investment that could increase the use of blockchain technology and are just as significant as cryptocurrencies, the world of evolving technology is changing quickly; for example, artificial intelligence has fundamentally changed the way people think about old technology.
Analyzing BTC Dominance
A detailed examination of Bitcoin’s dominance can help comprehend the trends of the crypto market and identify trading opportunities. There is no exact science to using BTC dominance to study the bull market and bear market trends. Using BTC dominance, we can obtain a more comprehensive description of the overall market trend by considering Bitcoin’s best performance compared to other cryptocurrencies. Traders and investors should consider BTC dominance and other tools and indicators, some of which are listed below.
The Significance of Measuring Bitcoin Dominance
Whenever Bitcoin’s market cap rises, it boosts the confidence of traders and investors because it is a positive sentiment and if Bitcoin’s market cap is low, investors will lose their confidence and they avoid doing more investments. Due to the apprehension in the entire crypto market, fear rises among crypto traders and investors, which causes the downfall of the crypto market.
BTC Dominance Ratio and Chart Analysis
The total value of Bitcoin is different from the US dollar and gold as, In April 2023, one Bitcoin’s worth approximately is 29,770 US dollars. Similarly, if we do a ratio analysis of Bitcoin to gold at the current price of bitcoin, which is 29,770 USD, the ratio of BTC to gold will be about 0.025, and this rate is equal to the price of 24-karat gold. The real Bitcoin dominance ratio analysis indicates that Bitcoin is the king of the market and rules the entire market.
After observing the Bitcoin dominance ratio, we conclude that BTC dominance is the ratio that has fluctuated over the years. Bitcoin’s market cap reached its highest level in January 2018, around 70%. When altcoins, like Ethereum and BNB, were launched the dominance of BTC started to decline. Bitcoin dominance is going down because other cryptocurrencies have now proven their worth, and crypto investors are interested in other cryptocurrencies other than Bitcoin.
Historical Trends of Bitcoin’s Market Share
Bitcoin has been the most significant cryptocurrency but over time, other cryptocurrencies have also gained considerable market share, but they have never been able to beat Bitcoin, whether the bull market trend is going on. We look at the historical data of Bitcoin 12 years ago, the price of BTC was 0.7$, and when the initial coin offering was made, BTC was even cheaper. In the present era, i.e., in April 2023, Bitcoin’s price is about 30000$ approximately. Bitcoin’s share price is listed below for each year.
Bitcoin’s price by years in the month of April-203
| Year APR-23 | Price | Year APR-23 | Price | Year APR-23 | Price |
| 2023 | $27,922 | 2022 | $42,782 | 2021 | $58,245 |
| 2020 | $7,302 | 2019 | $5,205 | 2018 | $6,771 |
| 2017 | $1,188 | 2016 | $419 | 2015 | $244 |
| 2014 | $443 | 2013 | $190 | 2012 | $4.8584 |
| 2011 | $0.7374 | 2010 | Not-known | 2009 | Not-known |
Factors Affecting Bitcoin Dominance
A bear market indicates that the market is declining, and a bull market suggests that the market is rising, and we use BTC Dominance to analyze market cycles and trends. As you know, Bitcoin (BTC) is the largest coin in the crypto-currency market in terms of its market cap. The main factors affecting Bitcoin’s dominance compared to other cryptocurrencies are as follows.
Regulation & Government Intervention
Cryptocurrencies are not yet to be legalized in many countries. Many governments and their regulatory bodies still need to be more confident about cryptocurrency. But some of the countries that have adopted cryptocurrency are as follows.
| Sr# | 1 | 2 | 3 | 4 | 5 |
| Country | El Salvador | Slovenia | Germany | Canada | Malta |
| Sr# | 6 | 7 | 8 | 9 | 10 |
| Country | Netherlands | Singapore | Estonia | Switzerland | Portugal |
And the rest of the countries still need to decide whether to regulate and use cryptocurrency within their borders. Many governments and their regulatory bodies are facing some issues in legalizing cryptocurrencies, some of which are as follows.
- The legal framework of cryptocurrency.
- The implementation of the tax on transactions of digital assets.
- The framework of restrictions on the use of cryptocurrencies for illegal activities.
- The rules and regulations to prevent money laundering.
- The legislation for cryptocurrency exchanges.
Technological Advancements and Innovations
If we talk about technology change, the first fantastic technology we will cite is blockchain technology. This technology brings us to the changing situation with advancements and innovations of the modern era with cryptocurrency and NFTs. Changing technologies continue to influence the crypto-currency market. As blockchain networks become more scalable over time and making them more user-friendly, efficient, and secure.
Institutional Investment in Crypto Assets
Big corporate investors such as banks, financial institutions, and digital companies show their interest in cryptocurrencies that why; confidence in the entire cryptocurrency market is expected to rise. Financial institutions’ announcements regarding accepting crypto as a payment method affect the rise and fall of the market. Cryptocurrencies have yet to gain the trust that a financial institution primarily requires. Institutions feel the risks of investing in cryptocurrencies and have waited for some assurance from other institutions. For example, when the Tesla Company announced accepting Bitcoin as a payment method instead of other fiat currencies in March 2021 for their car sales, the market suddenly increased.
Trading Opportunities Based on BTC Dominance,
Before making any trades, traders should conduct their research first, and monitor Bitcoin dominance. For example, if BTC investment is expected to rise, it is a better time to trade crypto and a decrease in BTC dominance, which could lead to a drop in the value of altcoins because traders are withdrawing their funds from BTC out of fear of loss.
How to Use the Information to Make Trading Decisions,
A good trader stays up to date on all cryptocurrency and Bitcoin news and by analyzing the information, he devises practical solutions. Traders can use their knowledge of the Bitcoin dominance index to make informed trading decisions and can achieve their investment objectives by using BTC dominance. Analyzing a few specific strategies can help reduce potential losses, so some are listed below.
- To investigate the impact of market news.
- Understanding the bull market and bear market trends
- Concentrating on interviews with famous people that influence Bitcoin dominance
- Become familiar with market charts and candles.
- Understanding the market’s levels of support and resistance
Identifying Stronger Trends in the BTC and Altcoin Market,
We cannot rely on a single indicator in the cryptocurrency market. To understand trends and the overall market situation, we must use a variety of indicators and some of which are the following.
- Bitcoin dominance index
- Historical charts
- Dial indicators
- Ratio analysis
- Price movement
- Overall market sentiment
Investment Strategy Based on BTC Dominance Understanding Different Types of Crypto Investors Diversifying Your Investment Decisions by Looking at Other Coins and Tokens,
Traders must understand that crypto investors use different techniques to achieve their profit objectives but traders should do their own research on other blockchain projects regarding crypto and NFTs to maximize profit. It is critical to do so because their prices increase quickly or will steady decline. Traders and investors can get benefit from understanding the distinction between a coin and a token.
Conclusion: Understanding BTC Dominance
For understanding BTC dominance; we welcome all traders and investors to learn about it because cryptos are volatile assets and motivate them to be a part of the crypto ecosystem. The increase and decrease of Bitcoin’s market cap affect the performance of other cryptocurrencies. BTC still has a significant lead over altcoins, and using BTC dominance as the future trend cannot be predicted. Investors base their decisions on current events and know that Bitcoin has historically been a dominant cryptocurrency.
BTC’s market cap was frequently 60% or higher in the past; however, Bitcoin’s market dominance has decreased in recent years. The popularity of other cryptocurrencies, particularly Ethereum and BNB, has impacted Bitcoin’s market dominance. The cryptocurrency market is highly volatile and unpredictable because investors are wary of investing in cryptocurrencies and looking for crypto space to invest in new coins. Before investing in cryptocurrency, it is critical to consider all risks and conduct thorough research on your chosen project.
FAQs:
1. What is the difference between BTC dominance and BTC?
BTC dominance is a ratio of the overall capital of the market in cryptocurrencies and investors, traders, exchanges of capital, and market sentiment all impact it. While Bitcoin was created in 2009 and is a regular digital coin, it is called BTC. In some countries where BTC permits trading, BTC has earned the trust to pay for goods and services in the same way as our standard or other fiat currency.
2. What is Ethereum’s (ETH) dominance?
Since ETH is a digital coin, its dominance in crypto markets is identical to that of BTC. Ethereum is a blockchain with a digital currency called ETH that accounts for a particularly significant portion of the cryptocurrency market cap. ETH’s dominance over other cryptocurrencies impacts the market, but not as much as BTC.
3. How do I know Bitcoin dominance?
You can check the current real BTC dominance on numerous websites, including CoinMarketCap, CoinMarketCal, CoinDesk, and Coingecko.
4. How can we calculate the Bitcoin price?
You can figure out how to calculate Bitcoin’s price or any other altcoin on your own using the following formula:
BTC Price Or Altcoin Price = Total Market Cap (Bitcoin Market Cap or Altcoin Market Cap / Total Circulating Supply (BTC or Altcoin)