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What is Dominance? Understanding the BTC Dominance Index and Its Impact on the Crypto Market
If you are new to the world of cryptocurrency, you have likely heard the concept of “Dominance” or “BTC.D” (DOM). But what is dominance really? And why is this index so important? This article will help you better understand this concept and its actual impact on the entire cryptocurrency market.
BTC Dominance: Definition and Calculation Formula
BTC Dominance (abbreviated as DOM or btc.d) is an important technical indicator in the cryptocurrency market. It measures the market capitalization of Bitcoin compared to the total market capitalization of the entire crypto market globally. In other words, dominance shows the level of dominance, the overwhelming presence of Bitcoin in the cryptocurrency ecosystem.
The formula for calculating Dominance is very simple:
BTC Dominance = Bitcoin Market Capitalization / (Bitcoin Market Capitalization + Altcoin Market Capitalization) × 100%
For a specific example: If the market capitalization of Bitcoin is 9 billion USD and the total market capitalization of all other altcoins combined is only 1 billion USD, then BTC Dominance will be: 9 / (9 + 1) = 90%. By tracking this index, you can clearly see the dominance of Bitcoin in the market.
Why is BTC Dominance Important?
Bitcoin is considered the “king” of the cryptocurrency market. Most investors have to go through Bitcoin or USDT to participate in the cryptocurrency market. When altcoins plummet, many people shift their capital back to Bitcoin to preserve their assets. Therefore, BTC Dominance becomes a strategic variable to forecast the trend of the entire market.
This index clearly reflects market sentiment: when Bitcoin is strong, investors view it as a “safe asset” in crypto. When altcoins rise, it indicates that investors are seeking higher profit opportunities.
Four Main Market Scenarios
In the cryptocurrency market, four main scenarios often occur. Understanding these scenarios will help you better guide your investment strategy:
Scenario 1: Bitcoin rises, the whole market rises This is the ideal situation. Market confidence returns strongly, institutions and large investors pour money into both Bitcoin and altcoins. Dominance may increase, but the growth is widely shared.
Scenario 2: Bitcoin rises, altcoins fall This is a real scenario. Capital flows from altcoins or from outside the market into Bitcoin only. BTC Dominance significantly increases when investors “take profits” from alternative coins and shift into Bitcoin.
Scenario 3: Bitcoin falls, the whole market falls This is the most common scenario. When Bitcoin is weak, the entire cryptocurrency ecosystem will be shaken. It can be said that Bitcoin is the “king” of the market - when it is sick, the whole court will have difficulties.
Scenario 4: Bitcoin is sideways, altcoins rise At this stage, Bitcoin is “gathering strength” to prepare for a new price increase. Meanwhile, altcoins receive more attention from the market. This stage can last 1-2 years, creating significant profit opportunities for savvy investors.
Strategies When BTC Dominance Increases or Decreases
Knowing how to respond to changes in Dominance is key to avoiding heavy losses in the market:
When Dominance Increases:
Dominance increases + Bitcoin price rises sharply: Market confidence is strengthened. Investors are selling altcoins to buy Bitcoin, or there are more large institutions pouring capital in. At this point, focusing on altcoins with solid fundamentals and good products is a smart choice.
Dominance increases + Bitcoin price falls: Altcoins will fall even harder. To avoid heavy losses, many investors choose to sell to USDT or other stablecoins to protect their capital.
When Dominance Decreases:
Dominance decreases + Bitcoin price rises: Most altcoins also rise, and often grow stronger than Bitcoin. This is a golden opportunity to profit from potential projects.
Dominance decreases + Bitcoin price falls: Careful observation of market capital flows is needed. Initially, altcoins may fall sharply alongside Bitcoin, but then they may bounce back higher than before. This is a signal that capital is shifting from Bitcoin to altcoins.
When Dominance increases, capital from altcoins is gradually withdrawn and poured into Bitcoin. However, projects with real potential can still grow strongly, even surpassing Bitcoin. The optimal strategy at this point is to buy and hold highly-rated altcoins with truly good products, and not to buy at excessively high prices.
Historical Journey of BTC Dominance
To understand better, let’s look at key milestones in the history of Dominance:
2016: Bitcoin was below 100 USD. At this time, Ethereum did not exist; BTC accounted for over 90% of the crypto market capitalization. Absolute monopoly.
2017 - First half of the year: This was Bitcoin’s boom period. However, from mid-2017 onwards, ICO fundraising activities exploded like never before. BTC Dominance rapidly dropped to around 35% - the lowest level at that time. Ethereum reached 30% of market capitalization due to the overwhelming demand for buying ETH to participate in ICOs.
End of 2017: Bitcoin surged to a peak of 20,000 USD, BTC Dominance recovered sharply to over 65% - the highest level until 2019.
January 2018: BTC Dominance began to decline rapidly. At this point, market “whales” took profits and shifted capital to altcoins. The Bitcoin ratio dropped to only 33%.
April-July 2018: BTC Dominance increased again to nearly 45%, supported by positive news from the SEC as well as a price increase from 6,000 USD to 9,800 USD.
End of 2018: Bitcoin went through a long and painful decline, discouraging small investors. However, BTC Dominance remained around 50%.
2019 - First half of the year: BTC Dominance was at 50%-55%, indicating that investors were gradually regaining confidence in the market.
March 2020: Bitcoin dropped sharply but then quickly recovered. By the end of 2020 and early 2021, Bitcoin surged from 3,800 USD to 41,000 USD, causing BTC Dominance to spike to nearly 74%.
2025-2026 - Present Time: As of March 2026, BTC Dominance is at 55.18%. This level indicates that Bitcoin still holds a dominant position but is no longer a monopoly as before. The crypto market has matured with the emergence of many quality altcoin projects.
Other Indicators to Monitor Alongside Dominance
In addition to BTC Dominance, you should also pay attention to other indicators for a more comprehensive view:
To truly grasp the subtle changes in the market, you need to combine these indicators with practical experience and the ability to sense capital flows. Therefore, newcomers to the market may find it difficult if they do not have sufficient knowledge and analytical skills.
Conclusion
Understanding “what dominance is” and how to track BTC Dominance is an important step in your crypto investment journey. This index not only helps you forecast market trends but also supports you in making smarter investment decisions. Always keep an eye on BTC Dominance along with other indicators, combined with your own analytical skills, to avoid costly mistakes in the cryptocurrency market.