Bitcoin Dominance – What Is It?

Key Takeaways

• Bitcoin dominance shows how much of the overall crypto market is made up by BTC and helps explain where investors are placing their confidence.
• High dominance often signals that investors are sticking with Bitcoin during uncertain or early-stage market conditions.
• A drop in dominance can suggest growing interest in altcoins, especially during more optimistic market phases.

What is Bitcoin Dominance

Bitcoin dominance refers to the percentage of the total cryptocurrency market capitalisation that is made up by Bitcoin (BTC). It measures how much influence Bitcoin has over the broader crypto market, and is often used as a gauge for the strength or weakness of altcoins in comparison.

For example, if Bitcoin’s market cap is $2 trillion and the total crypto market cap is $4 trillion, Bitcoin dominance would be 50%. This means BTC makes up half of the entire crypto market’s value, showing how influential it remains even as the ecosystem expands.

Bitcoin dominance has been increasing since the beginning of 2023.

What Makes Bitcoin Dominance So High?

Several factors contribute to a high BTC dominance, especially during certain market phases:

Market Confidence

Bitcoin is considered the most secure and decentralised crypto asset. During uncertain times (like market corrections or macroeconomic instability), investors often retreat to BTC as a safer option compared to smaller, more volatile altcoins.

Institutional Adoption

With events like the approval of spot Bitcoin ETFs and growing interest from traditional finance, institutional money tends to flow into BTC first. This adds to its dominance compared to other cryptocurrencies.

ETFs have seen periods of selling (outflows), but averaged out significantly more buying (inflows)

Liquidity and Accessibility

BTC generally has the deepest liquidity and is the easiest crypto asset to buy, sell or hold across both centralised and decentralised platforms. That gives it an edge, especially when investors are feeling nervous about the market and prefer to stick with safer, more established assets.

Macro Conditions

In bear markets or when global interest rates are high, riskier assets (like many altcoins) often don’t do as well as Bitcoin. BTC, with its ‘digital gold’ narrative, often holds its value better.

What Happens When Bitcoin Dominance Falls?

When BTC dominance declines, it typically means that altcoins are gaining market share, often referred to as an “altcoin season”. These periods can see significant price rallies in altcoins as investors move capital away from Bitcoin into higher-risk assets with higher potential returns.

However, dominance falling isn’t always bullish. It can also reflect capital leaving BTC faster than altcoins during broader market selloffs. Context is key.

Benjamin Cowen is reminding his audience that Bitcoin Dominance can still go higher

Historical Patterns of Bitcoin Dominance

• In early bull markets (like 2017 or 2021), BTC dominance often spikes first as Bitcoin leads the charge.
• As confidence grows and prices rise, investors begin to rotate into altcoins, dropping BTC's dominance and fueling alt season.
• In bear markets, BTC dominance typically climbs again as capital seeks stability.

Right now, Bitcoin dominance is elevated, suggesting early-stage confidence in the cycle. If dominance begins to reverse, and altcoins start outperforming, it may indicate a shift in market sentiment.