There’s a metric that I think many people still haven’t fully understood: Bitcoin Dominance. Simply put, it measures Bitcoin’s share in the entire crypto market, expressed as a percentage. You can think of Bitcoin Dominance as reflecting Bitcoin’s market weight relative to all other cryptocurrencies.

Why should you pay attention to this? Mainly because it can reflect the overall direction of the market. When Bitcoin Dominance is very high—for example, above 50%—it suggests that people have stronger confidence in Bitcoin. This situation usually appears during a bear market, because investors tend to cling to the safest assets. On the other hand, if Bitcoin Dominance falls below 50%, it means the market is starting to look more favorably at other coins, which often happens in a bull market, when investors begin chasing higher returns.

From the perspective of market cycles, changes in Bitcoin Dominance are a great barometer. When Bitcoin’s dominance starts rising, it indicates that capital is flowing from smaller coins into Bitcoin, and the market may be cooling down. But if Bitcoin Dominance continues to decline, it could be that “altcoin season” is coming—when various smaller coins start to perform.

So my advice is to treat Bitcoin Dominance as a reference indicator for which stage the market is in. It’s not an absolute criterion for judgment, but it can definitely help you understand where the market is headed overall. Especially when it comes to asset allocation, this metric is particularly useful.