Get to Know What Is Bitcoin Dominance in Crypto

Liputan6.com, Jakarta In the crypto market, it is known as Bitcoin Dominance or Bitcoin domination, so what is Bitcoin domination? In more detail, Bitcoin dominance is a percentage value which is calculated based on the current Bitcoin market cap divided by the global crypto market cap.

Reporting from the crypto exchange site Crypto.com, Tuesday (18/4/2023), for example, Bitcoin’s market capitalization is USD 539 billion or the equivalent of IDR 8,009 trillion (assuming an exchange rate of IDR 14,859 per US dollar), while global crypto market capitalization is USD 1 .16 trillion or the equivalent of Rp. 17,236 trillion.

Dividing USD 539 billion by USD 1.16 trillion equals 46 percent, this is the share of the crypto market cap that is in Bitcoin. Meaning that bitcoin dominates the crypto market by 46 percent.

How Crypto Investors Use Bitcoin’s Dominance

This ratio comes from Bitcoin’s relationship with other crypto markets. It serves as a metric that crypto traders or investors can use to get a pulse on the market, manage risk, and help spot possible trends and trading opportunities, usually in conjunction with other data sets.

Looking at historical data, most crypto markets generally follow the shape and direction that Bitcoin is taking. Since Bitcoin dominates a large part of the overall crypto market capitalization, it has historically been highly and positively correlated with the majority of altcoins, which then react strongly to their price movements.

With this correlation, some argue Bitcoin dominance can also help in understanding trends in the altcoin market.