Bitcoin Dominance Explained. When to buy Alts?

4 lut 2023

BTC domination: how to use it? And when to buy Altcoins?

Today we will talk about Bitcoin Dominance.
What is bitcoin dominance? Why is needed? And why exactly Bitcoin?
Bitcoin is the first and the largest cryptocurrency by market capitalization.
Altcoin is any cryptocurrency other than Bitcoin.

Dominance (BTC.D) displays the relationship between the direction of movement of different cryptocurrencies. To find this index you just need open TradingView and type BTC.D

There are quite a lot of indexes known to you in the world, the most famous of them are:
Dow Jones Industrial Average
S&P 500
RTS

Bitcoin dominance is the ratio of its market capitalization to all other cryptocurrencies.
However, we cannot trade this index.

Pure math: if the capital invested in bitcoin decreases, then part of the funds goes into altcoins.

BTC.D gives an understanding of the general direction of the market at the moment and helps to determine when alt pairs are correlated with the first cryptocurrency.

However, the dominance of Bitcoin is declining as new cryptocurrencies emerge.
Why? Because the capitalization of the alts is increasing much faster than the capitalization of bitcoin.
Bitcoin dominance often depends on the altcoin season
Altseason is a period during which altcoins gain a significant market share relative to Bitcoin, thus reducing the dominance of Bitcoin.

Note, however, that Bitcoin dominance does not always depend on the phase of the market.
What does it mean?
This means that if bitcoin falls in price, and with it the alts, then the dominance of bitcoin will remain approximately at the same level.

I prepared this cheat list by which you can determine the further movement of alts, depending on the Dominance of Bitcoin

You can always use it! Bitcoin dominance also can be used even on lower timeframes but it’s not a magic pill and you should understand some alts follow more btc some less. Thats why you can see situations when bitcoin going down and some alts with low cap can pump 100% in a few days.

Bitcoin dominance is just a tool that can give us more information about the state of the current market, and its possible future. On the Bitcoin Dominance chart, technical analysis works well, its help you to try predict the movement of the Bitcoin price relative to other alts.

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✅Disclaimer: Please be aware of the risks involved in trading. This idea was made for educational purposes only not for financial Investment Purposes.

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