Bitcoin (BTC) is the oldest and most reputable cryptocurrency in the world. Given its huge market capitalization, which often exceeds all of the largest altcoins combined, it is not surprising that Bitcoin exerts a massive influence on the entire market.
Bitcoin fully dominates the cryptocurrency space, to say the least. When discussing the market, a common term that comes up is “Bitcoin dominance”, but not everybody seems to know what this important metric is or how it is used.
This article aims to explain what Bitcoin dominance is, how it works, and how traders use the metric to navigate the extremely volatile crypto market.
What Is Bitcoin Dominance?
Bitcoin dominance is the ratio between Bitcoin’s market capitalization and the total market cap of other cryptocurrencies. The purpose of this metric is to help traders make informed decisions by gaining a sense of Bitcoin’s market value relative to other cryptocurrencies, otherwise known as altcoins.
It gives traders and investors an understanding of how the cryptocurrency market is performing and where it is headed. Historically, the overall crypto market follows Bitcoin’s lead, mainly due to the apex crypto asset’s dominant position and its preference by retail and institutional investors alike.
History of Bitcoin Dominance
In the early years of Bitcoin, there were very few altcoins available in the market, therefore, the Bitcoin dominance metric was at an average of 80%. This was the case even when Ethereum first emerged in 2015, with Bitcoin’s market dominance standing at nearly 90%.
2017 was a pivotal period, as it saw the emergence of numerous blockchains and their native cryptocurrencies. This led to investors using Bitcoin as an anchor point to determine if the altcoins are experiencing an uptrend or downtrend relative to its price. While the index has been in use since then, it didn’t become mainstream until the 2021 altcoin bull run after being introduced by platforms like CoinMarketCap and TradingView.
2018’s ICO boom saw a number of altcoins becoming more popular than Bitcoin, which led to BTC dominance dropping to an all-time low of 37.6%. However, the metric shot back up to 71% after Ethereum (ETH) suffered an 87% loss in 2019.
Throughout 2024, Bitcoin dominance varied between 52% and 61%, peaking in November following the victory of Donald Trump in the US Presidential elections. As of April 2025, Bitcoin’s market dominance ranges between 56% and 60%.
How Is Bitcoin Dominance Calculated?
To calculate Bitcoin dominance, one has to divide Bitcoin’s current market cap by the combined market cap of all the remaining cryptocurrencies. Here is the formula:
Bitcoin Dominance = Market Cap of BTC / Global Crypto Market Cap
To understand this further, let’s imagine a scenario where Bitcoin’s market cap stands at $5 billion while the total crypto market cap is $10 billion. If we apply the formula here, then the Bitcoin dominance would be 50%.
What Is Real Bitcoin Dominance?
There is another Index called the ‘Real Bitcoin Dominance’, which only takes into account Bitcoin’s market hold over cryptocurrencies that rely on proof-of-work (PoW) consensus for token issuance. The concept behind it is to track the performance of cryptocurrencies with the potential to be used as a medium of exchange, rather than being solely utilized for functioning on their native blockchain.
It is calculated by dividing Bitcoin’s market cap by the market cap of PoW cryptocurrencies, including BTC, Litecoin (LTC), Dogecoin (DOGE), and others. Here is a formula to help you understand better:
Real BTC Dominance = BTC Market Cap / (BTC Market Cap + Market Cap of PoW Coins)
A key distinction between Bitcoin Dominance and Real Bitcoin Dominance is that the latter excludes ICOs and stablecoins due to their association with centralized intermediaries. In 2024, the index fluctuated between 71% and 76%, and so far in 2025, it remains in the 71% to 72% range. Real Bitcoin Dominance reached its peak in December 2019, when it was recorded at 85%.
How Traders Use Bitcoin Dominance To Dictate The Crypto Market Sentiment?
The crypto market is heavily dependent on Bitcoin’s performance, largely due to the flagship crypto’s greater influence on the industry. It is, by and large, the most valuable and popular digital asset.
Therefore, when Bitcoin Dominance is down, traders anticipate it as a potential altcoin season – a period when all cryptocurrencies except BTC experience price gains. During this time, investors tend to move their funds from Bitcoin into cryptocurrencies that potentially have a more lucrative market.
Conversely, if Bitcoin’s price and dominance are on the rise, then it could be an indication of a potential bull run for BTC, with traders expecting prices to soar to record highs.
How Does Rising And Falling Bitcoin Dominance Affect The Market?
Now let’s explore how rising and falling Bitcoin dominance is impacting the crypto market.
Bitcoin Dominance Up
- When Bitcoin dominance is up, traders notice whether the price of BTC is rising. If the price is moving upwards, then it is indicative of a positive market sentiment for BTC, but a decrease in interest for altcoins. Investors take this as a sign to accumulate more Bitcoin, or draw up plans to exit the market once the cryptocurrency reaches take-profit levels.
- On the contrary, if the price of Bitcoin is dropping while market dominance is up, it could set off a bearish outlook for the market even if altcoins are performing relatively well. Investors could view this as a signal to sell their smaller altcoin holdings, ones that could crash heavily, and start accumulating BTC at lower rates.
Bitcoin Dominance Down
- When Bitcoin dominance is going down, but the price is on the rise, then it could suggest an increase in investors’ interest in other cryptocurrencies. This could imply the start of a bull market, with most crypto assets experiencing a surge in price and gaining more momentum than BTC.
- However, if the price of BTC is decreasing along with Bitcoin dominance, it is an indication that a bear market is imminent, and investors are likely to sell their Bitcoin and other cryptocurrencies for fiat-backed stablecoins. While this situation is highly unlikely, it could be a good time for investors to reduce market exposure or look for opportunities to acquire large market-cap cryptocurrencies at lower prices.
What Factors Influence Bitcoin Dominance?
Here are the key factors that influence crypto market conditions and Bitcoin dominance:
Changing Market Trends
The growing popularity of altcoins has resulted in Bitcoin losing a significant portion of its market share. One main reason for this is programmable blockchains like Ethereum and Solana offering more utility to the end-user than the Bitcoin network. While recent upgrades allow the Bitcoin blockchain to support decentralized applications (DApps) and NFTs, there are still bottlenecks to be addressed because it was not built from the ground up to handle these technologies.
Bull and Bear Market Conditions
A general rule of Bitcoin dominance is that altcoins can rise and fall harder. During a bull market, the popularity of altcoins rises, causing investors to prefer them over BTC. They turn towards riskier crypto investments in the hope of seeing big returns, leading to Bitcoin’s dominance falling. But Bitcoin’s dominance rises during bear market conditions as investors move their money from altcoins into BTC to hedge against volatility.
Stablecoin On-Ramping
Stablecoins – crypto tokens pegged to the value of stable assets like the dollar and gold – have been piling pressure on Bitcoin’s market dominance. These days, during bear markets or periods of volatility, investors divert their capital to stablecoins to mitigate risk. It also allows them to stay within the crypto ecosystem during extreme volatility. The stablecoin on-ramping efforts have drastically reduced the share of the entire crypto market valuation relative to Bitcoin.
New Cryptocurrencies and Digital Assets
There are tens and thousands of cryptocurrencies currently in existence, and they have a cumulative market cap exceeding $3 trillion. NFTs have emerged as alternative crypto assets that are more attractive to investors as they are created on blockchains native to altcoins like ETH and SOL. Many believe altcoins offer more utility than BTC, which is another reason for declining Bitcoin dominance.
Final Thoughts
Bitcoin Dominance is an index that allows crypto investors to analyze whether the crypto market is “bullish” or “bearish” by comparing Bitcoin’s price and market share relative to other tokens.
It needs to be used alongside other indicators and interpreted with larger market trends for accurate results. Although the metric is largely helpful, critics argue that it was only relevant when the market was smaller and that Bitcoin’s influence over the overall market is steadily declining.
Meanwhile, some others argue that only altcoins that utilize the proof-of-work (PoW) consensus and have the potential to function as a decentralized medium of exchange in the real world can be used to determine Bitcoin dominance.
While neither of these arguments is right or wrong, they are instrumental in shaping investor sentiment. Nonetheless, Bitcoin dominance is a popular metric to determine crypto market conditions and make informed investment decisions.