Bitcoin Dominance (BTCD) Definition
Bitcoin Dominance (BTCD) refers to the ratio of Bitcoin’s market capitalization to the market cap of all other cryptocurrencies combined. This statistic is often used as a barometer to measure the market sentiment towards Bitcoin versus other cryptocurrencies.
Bitcoin Dominance (BTCD) Key Points
- Bitcoin Dominance (BTCD) represents Bitcoin’s share of the total cryptocurrency market cap.
- A high BTCD indicates that Bitcoin is the predominant investment in the crypto market.
- Low BTCD may suggest investors are diversifying into altcoins or other cryptocurrencies.
What is Bitcoin Dominance (BTCD)?
Bitcoin Dominance (BTCD) is a metric used to measure the relative significance of Bitcoin within the cryptocurrency market. It’s effectively a measure of Bitcoin’s market cap compared to the total market cap of all cryptocurrencies. When BTCD is high, it suggests that Bitcoin is the dominant player and the most preferred investment within the crypto market.
Why is Bitcoin Dominance (BTCD) Important?
BTCD is considered an indicator of market sentiment towards Bitcoin, the original and largest cryptocurrency by market cap. A high BTCD can indicate strong investor confidence in Bitcoin, seen as a “safety-net” asset within the crypto world. Conversely, a falling BTCD may suggest that investors are moving into “altcoins” (alternative cryptocurrencies to Bitcoin) as they seek high returns or diversify their crypto holdings.
Where is Bitcoin Dominance (BTCD) Used?
BTCD is frequently mentioned in news articles, market analysis and social media discussions about the state of the cryptocurrency market. Traders and investors use it in conjunction with other indicators to aid in decision-making – gauging whether the market is favouring Bitcoin or diversifying into altcoins.
When is Bitcoin Dominance (BTCD) Used?
Investors reference BTCD when planning their investment strategy in the crypto market. It can provide insight into market trends and potential future movements. For example, during market downturns, a rising BTCD might indicate a ‘flight to safety’ as investors retreat to the perceived relative security of Bitcoin.
How is Bitcoin Dominance (BTCD) Calculated?
Bitcoin Dominance (BTCD) is calculated by dividing Bitcoin’s current market cap by the market cap of every other cryptocurrency combined, then expressing that ratio as a percentage. This percentage tells us how much of the total value in the cryptocurrency market is concentrated in Bitcoin itself.
