Recently, I received several questions about what DOM means and why it is so important if you really want to understand how the crypto market moves. So here is an explanation from my perspective as someone who has been observing these patterns for years.

DOM is the abbreviation for Bitcoin Dominance, basically the percentage that represents Bitcoin's market capitalization compared to the total market capitalization of all cryptocurrencies. Simply put: if Bitcoin weighs more in the total, its dominance is higher. A few years ago, it was around 60-70%, now it fluctuates between 50-55%. The calculation is straightforward: divide Bitcoin's cap by the total cap of all cryptos. For example, if Bitcoin has 9 billion and everything else adds up to 1 billion, then 9/(9+1) = 90% dominance.

But here’s the interesting part: Bitcoin is basically the native currency of the ecosystem. Most people entering crypto need to go through Bitcoin or USDT first. And when altcoins crash, many traders rush to convert their holdings into Bitcoin to protect capital. That’s a fact you can’t ignore if you want to read the market.

In practice, the market behaves in four main scenarios. The first is when Bitcoin rises and drags the entire market with it; it’s the ideal scenario, meaning that new money is entering strongly. The second is rarer but happens: Bitcoin spikes while altcoins fall, which means that the capital flow is specifically migrating into Bitcoin. The third is the most common, when Bitcoin falls and takes everything else down with it—that’s how the market works. And the fourth is when Bitcoin moves sideways or down while altcoins make their own moves; this usually indicates that Bitcoin is accumulating strength for the next cycle.

Now, what happens when Bitcoin dominance rises? There are several scenarios. If DOM rises AND Bitcoin’s price grows strongly, investors sell altcoins to enter Bitcoin; confidence is recovering. If DOM rises but Bitcoin falls, altcoins fall even more, so many withdraw to USDT to avoid further losses. If DOM falls but Bitcoin rises, it means altcoins are gaining traction. And if both fall, you need to see where the capital is really flowing.

What I’ve seen in history is that when DOM increases, capital gradually withdraws from altcoins and flows into Bitcoin. During those times, it’s hard for altcoins to rise strongly, but there are always projects with potential that manage to escape and grow even more than Bitcoin. In those windows, I look for well-evaluated altcoins, with solid products, and that haven’t already gone up too much.

The milestones are clear. In 2016, Bitcoin was below $100 and represented over 90% because Ethereum didn’t even exist yet. In 2017, something historic happened: during the ICO boom, DOM fell to just 35%, the lowest level because everyone wanted ETH to participate in the offerings. Ethereum reached nearly 30% of the market. Then, at the end of 2017, when Bitcoin hit $20,000, DOM recovered to over 65%. By mid-2018, it was at 45% after whales took profits and rebalanced. The end of 2018 was disastrous but DOM stayed around 50%. By 2021, when Bitcoin jumped from $3,800 to $41,000, we saw DOM reach almost 74%.

What most beginners don’t understand is that Bitcoin dominance is just one piece of the puzzle. You also need to observe indices like TOTAL, TOTAL2, DEFI, USDT.D. It requires real experience and a sensitivity to see where the money is flowing. That’s why so many newcomers get lost along the way.