I see many of you still ask what BTC Dominance is and why it’s important for the crypto market. Today, I want to share a bit of my experience regarding this indicator.

What is Dominance? Simply put, it’s the percentage of Bitcoin’s market capitalization relative to the entire cryptocurrency market. For example, if Bitcoin has a market cap of 9 billion USD and all altcoins combined only total 1 billion USD, then Bitcoin’s dominance will be 90%. This index shows Bitcoin’s level of dominance over other coins, indicating how much “power” Bitcoin holds in the market.

Why is dominance important? Because Bitcoin is the “base currency” of crypto. Most people entering the market need to buy Bitcoin or USDT first, and when altcoins drop sharply, many move back into Bitcoin to preserve their capital. Therefore, tracking what dominance is and how it’s changing helps you understand the overall market trend.

I’ve noticed four main scenarios in the market. First, Bitcoin rises and pulls the entire market up — this is the best situation, where market confidence is strong, and big players pour money into both Bitcoin and altcoins. Second, Bitcoin rises but altcoins fall — here, capital flows only into Bitcoin, and dominance increases sharply. Third, Bitcoin falls along with the market — a common scenario, because when the “king” gets sick, the whole kingdom wobbles. Fourth, Bitcoin moves sideways or slightly down while altcoins rise — at this point, Bitcoin is gathering strength, about to enter a new bullish phase.

When dominance increases, you need to understand that capital from altcoins is flowing out and into Bitcoin. If Bitcoin’s price rises strongly at the same time, many traders will sell altcoins to buy Bitcoin. But if Bitcoin’s price drops while dominance rises, altcoins will fall even more, and you should switch to USDT to avoid losses. Conversely, when dominance decreases and Bitcoin’s price rises, most altcoins tend to increase, often more sharply than Bitcoin.

Looking back at history, Bitcoin’s dominance was once very high. In 2016, Bitcoin had no major competition, accounting for over 90% of the market cap. But in 2017, when ICOs exploded, dominance dropped to just 35% because everyone was rushing to buy Ethereum to participate in projects. At the end of 2017, when Bitcoin hit $20,000, dominance recovered to 65%. Then, early 2018, whales took profits, causing dominance to fall to 33%, and the market experienced a devastating decline. From 2018 to 2019, dominance stabilized around 50%. Then in 2020, as Bitcoin crashed from $3,800 and then surged to $41,000 by year-end, dominance rose close to 74%.

Currently, what is dominance? It’s at 57.39% and still fluctuating. This indicates the market is in a balanced phase, with capital fairly evenly distributed between Bitcoin and altcoins. If you want to catch the trend, always pay attention to this index. When dominance rises, focus on Bitcoin or well-rated altcoins with real products. When dominance falls, it could be an opportunity for altcoins to break out.

Additionally, you should also look at TOTAL, TOTAL2, the DEFI index, and USDT.D for a more comprehensive view. Capital flow is very complex, which is why beginners often lose money. But if you persist in learning and tracking what dominance is along with other indicators, you will gradually grasp the market’s rhythm.