The dominance of cryptocurrencies – what is it?

The dominance of Bitcoin is expressed in an index called BTCDOM. This index reflects the value of Bitcoin relative to the total cryptocurrency market. It provides an overview of the market and allows for speculation on the potential of the first cryptocurrency compared to other tokens.

If the share of altcoin market capitalization increases relative to Bitcoin, then the dominance index decreases. In a situation where Bitcoin increases its market capitalization relative to altcoins, the index rises.

The calculation is based on the following formula: BTCDOM = (Bitcoin market capitalization / altcoin market capitalization) * 100%.

How to Apply the Index in Practice?

Some exchanges have already launched trading products called BTCDOM, which allow speculation on the dominance of the oldest cryptocurrency.

Additionally, the index allows:

Comparing the demand for Bitcoin with the demand for altcoins;
Determining the bullish and bearish market for altcoins;
Shifting capital into altcoins when dominance is in a downward trend;
Having time to convert assets into stablecoins or fiat currencies.

Based on the information mentioned above, the Bitcoin dominance index allows for more accurate technical analysis and reduces trading risks.