Bitcoin dominance measures how much of the total market capital of cryptocurrencies is comprised of bitcoin. Bitcoin Dominance is proven as the best tool to identify the trend of Altcoins. As we all know Bitcoin is the world’s largest crypto when it comes to market capitalization and hence the price action/dominance of Bitcoin has a significant effect on the altcoin market.
In the beginning stages of the crypto market, only Bitcoin and a few altcoins were present out of which only Bitcoin was used to trade on exchanges. So, back then the dominance of Bitcoin was nearly 100%. Slowly as more altcoins came into the market with the invention of the ERC-20 standard and ICO boom, a significant amount started flowing into alts .
When the bitcoin dominance increases i.e when the cryptocurrency market share of Bitcoin increases, altcoins start to lose value and when the bitcoin dominance decreases i.e. when the market share of Bitcoin decreases, altcoins start to gain value.
When the bitcoin dominance is above 70% Altcoin market is said to be in bearish mode and when its below 60 % Altcoin market is said to be in bullish mode. In the 2017 Altcoin rally, the Bitcoin Dominance was as low as 30% which led to an incredible rally in Altcoins. You can find the bitcoin dominance chart here
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