I see that many people are still unclear about this indicator, so today I will clearly explain what BTC dominance is and why it is so important.

BTC Dominance, also known as btc.d or DOM, simply refers to Bitcoin's market share ratio compared to the total market capitalization of all cryptocurrencies. The calculation is not too complicated; it equals Bitcoin's market cap divided by the total market cap of all coins. For example, if Bitcoin has a market cap of 9 billion USD and all altcoins combined are 1 billion USD, what is btc dom? It would be 9 divided by 10, which equals 90%. Currently, this index fluctuates around 57%, a significant increase from the 50-55% range a few years ago.

Why should we pay attention to what BTC dominance is? Because Bitcoin is considered the "base currency" of the market. Most people need to buy Bitcoin or USDT to enter the market, and when altcoins drop sharply, they will shift back to Bitcoin to preserve their capital. This indicates Bitcoin's dominance in the market.

The crypto market usually follows four main scenarios. First, Bitcoin rises along with the entire market, which is the most ideal situation when market confidence is strong. Second, Bitcoin rises but altcoins fall, with capital flowing only into Bitcoin. Third, Bitcoin drops along with the market, which happens quite frequently. Fourth, Bitcoin remains sideways or slightly declines while altcoins increase, indicating Bitcoin is gathering strength for a new rally.

When BTC dominance is high and increasing, you need to recognize that capital from altcoins is flowing into Bitcoin. If DOM increases and Bitcoin's price rises sharply, it shows market confidence is growing, and investors are selling altcoins to buy Bitcoin. If DOM increases but Bitcoin's price drops, then altcoins will likely fall even more, and many people choose to sell to USDT to avoid losses. Conversely, when DOM decreases and Bitcoin's price rises, most altcoins tend to outperform Bitcoin.

The history of this index is also quite interesting. In 2016, Bitcoin accounted for over 90% of the market cap because Ethereum didn't exist yet. In 2017, during the ICO boom, btc dom dropped to just 35%, the lowest at that time, as people poured money into Ethereum to participate in ICOs. At the end of 2017, when Bitcoin reached $20,000, DOM recovered above 65%. Early 2018, whales took profits, DOM fell to 33%, then a few months later it rose back to 45%. The end of 2018 was a dark period, with Bitcoin dropping sharply but DOM remaining around 50%. In 2020, when Bitcoin crashed from $3,800 and then recovered, it rose to $41,000 by early 2021, and at that time DOM surged close to 74%.

Currently, DOM is at 57%, indicating the market is more balanced compared to when Bitcoin dominated completely. If you want to catch market trends, always keep an eye on this index. Additionally, you should also consider other indicators like TOTAL, TOTAL2, DEFI, and USDT.D for a more comprehensive view. That’s also why beginners often struggle—they only look at prices and forget the bigger picture of the market.