What is the significance of Bitcoin's Dominance? Does it tell us anything about the performance of altcoins? Those who say that this ratio does not give an accurate reflection of the crypto market? We'll take a look at how Bitcoin dominance works with you.
Bitcoin is the world's largest cryptocurrency in terms of market capitalization. A large part of the transaction volume in its markets belongs to Bitcoin. Therefore, it is defined as the ratio between Bitcoin's market value and the market value of the remaining cryptocurrencies in the market.
Until the last 5 years, there were few cryptocurrencies other than Bitcoin. Market dominance was close to 100%. With the development of blockchain technology, people's interest has increased. With this interest, cryptocurrency units have increased as the output of thousands of projects. As of now, 4143 cryptocurrencies are listed on CoinMarketCap and 6098 on CoinGecko
Global crypto market value as of now is $ 767.33 billion.
Bitcoin Dominance began to decline as new cryptocurrency units were created. It is related to the increasing popularity of ICOs after the introduction of Ethereum and the ERC-20 token standard.
Decline in bitcoin dominance qualifies as "altcoin season" for other cryptocurrencies.
Bitcoin Dominance does not always directly affect the bull or bear markets. Bitcoin Dominance is a rate. If Bitcoin's price falls, this rate drops if the rest of the cryptocurrency market rises at a similar rate.
This rate does not imply market value money flow. It is a measurement based solely on the circulating supply and the current market price.
My final words
It is used by traders to monitor sentiment in the crypto market. Obviously, Bitcoin's market cap is an important indicator of how investors feel.
Bitcoin dominance can help guide you how much of your capital you should allocate to altcoins. It is important that you do not put your eggs in one basket and rely on other analysis methods.
I hope I have created awareness for you about Bitcoin Dominance.
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See you next time. Take care of yourselves…
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