Understanding Bitcoin Dominance: How to Read & Use Crypto Charts

Bittime – Bitcoin dominance is an important tool in the cryptocurrency world that describes how dominant Bitcoin is compared to other altcoins. Understanding Bitcoin dominance charts can provide valuable insight into crypto market trends, including whether it's time to focus on altcoins or Bitcoin. This article will explain what Bitcoin dominance is, how to read it, and how to use it to make smarter investment decisions.

What is Bitcoin Dominance?

Bitcoin dominance is a measure of how much influence Bitcoin has over the overall cryptocurrency market. It is calculated by comparing Bitcoin's market capitalization to the market capitalization of all cryptos. For example, as of May 2024, Bitcoin has a market capitalization of $1.303 trillion out of a total crypto market capitalization of $2.513 trillion, which means Bitcoin dominance is currently 51.9%.

Why is Bitcoin Dominance Important?

Bitcoin dominance is important because it gives an idea of ​​Bitcoin's strength in the crypto market. Typically, if Bitcoin dominance decreases, it could mean that investors are starting to look at altcoins, signaling a potential “altcoin season.” Conversely, if Bitcoin dominance increases, this could be an indication that Bitcoin is entering a profitable bull run phase.

History of Bitcoin Dominance

Before 2017, Bitcoin dominance was often above 80%, because altcoins were not yet widely known. However, with the emergence of ICOs in 2017, altcoins like Ethereum gained huge attention, resulting in a decline in Bitcoin dominance. Since then, Bitcoin dominance charts have become an important tool for traders to track shifts in interest from Bitcoin to altcoins and vice versa.

Factors Affecting Bitcoin Dominance

Several factors that influence Bitcoin dominance include:

1. New Narratives and Revolutionary Coins: The launch of a promising new coin can draw attention away from Bitcoin, causing a temporary decline in Bitcoin's dominance. These coins often offer unique features that differentiate them from Bitcoin.

2. Stablecoin Popularity: Demand for stablecoins such as USDT and USDC has been increasing since 2018, putting pressure on Bitcoin dominance. Stablecoins offer price stability and are often used as a place to store profits during periods of high volatility.

3. Emergence of New Coins: The introduction of many new altcoins with great potential can reduce Bitcoin dominance. However, after the hype period passes, investors often return to Bitcoin, increasing its dominance again.

How to Read Bitcoin Dominance Charts

The Bitcoin dominance chart is a visual tool that shows how big Bitcoin's market share is compared to the total cryptocurrency market. Here's how to read it:

1. Chart Access: Visit a site like CoinGecko to view Bitcoin dominance charts.

2. Select Time Range: Charts are usually set at a default of 90 days. For historical data, select the "Max" option to view information since Bitcoin's inception.

3. Compare to Altcoins: For a more in-depth analysis, compare Bitcoin's dominance to other altcoins such as Ethereum (ETH) by checking the boxes on the chart.

4. Observe Trends: Pay attention to how Bitcoin dominance changes over time. A decrease in dominance often indicates a period of altcoin season, while an increase in dominance can indicate a bull run phase for Bitcoin.

How to Use Bitcoin Dominance Charts

• Determining Altcoin Season: When Bitcoin dominance decreases, it often indicates that altcoins are starting to gain more attention from investors. This could be a great time to invest in altcoins.

• Monitoring Bitcoin Prices: Use Bitcoin dominance to track Bitcoin prices and make smarter investment decisions. For example, if Bitcoin is dominant and the Bitcoin price is rising, this could signal a bull run. Conversely, if Bitcoin price rises but dominance decreases, there may be an altcoin season ahead.

The “Real” Bitcoin Dominance Index

The “real” Bitcoin dominance index takes into account Bitcoin and other proof-of-work coins that function as currencies, such as Litecoin (LTC) and Monero (XMR). It is calculated by dividing Bitcoin's market capitalization by the total market capitalization of proof-of-work coins.

Conclusion

Adding Bitcoin dominance charts to your investment analysis tools can help in understanding market trends and making more informed decisions. However, it is important not to rely solely on Bitcoin dominance. Also use other indicators and consider broader market trends. Always do thorough research before investing in any cryptocurrency or protocol.

How to Buy Crypto on Bittime

You can buy and sell crypto assets easily and safely via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also ensure you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. Study Complete Guide How to Buy Crypto on Bittime. 

Monitor graphic movement of Bitcoin (BTC) price, Ethereum (ETH), Solana (SOL), and other cryptos to find out today's crypto market trends in real-time on Bittime.