Dominance

What Is Dominance?

Dominance is an indicator of the value of Bitcoin in relation to the more significant cryptocurrency market. The Bitcoin Dominance Index compares the total market capitalization of Bitcoin to the total market capitalization of all digital assets. This statistic highlights Bitcoin's foundational role in the cryptocurrency market and its massively gigantic value compared to other digital currencies. 

Traders use it to track sentiment in the cryptocurrency market. The market capitalization of Bitcoin is an essential measure of investor sentiment. However, Bitcoin price variations are frequently symptomatic of shifts in mood across the entire crypto market. Thus, findings from the Bitcoin Dominance Index may also be applicable to altcoins.

Further Exploring Bitcoin Dominance

Bitcoin is the world's biggest cryptocurrency in market capitalization (market cap), and it controls a sizable percentage of the trading volume (and attention) in the cryptocurrency exchanges. Therefore, we can conclude with a total market cap estimate for the cryptocurrency space by looking at the summative market caps of all existing cryptocurrencies. 

As a result, Bitcoin dominance is described as the ratio of Bitcoin's market cap to the remainder of the cryptocurrency markets. While Bitcoin was by far the world's biggest cryptocurrency - one of the very few in existence - for so many years, its dominance was considerably closer to 100 percent than it is today. 

Nevertheless, as new cryptocurrencies emerged, Bitcoin's supremacy waned substantially. This is most likely because of the growing popularity of ICOs since Ethereum and the ERC-20 token standard was introduced. While Bitcoin dominance is an intriguing trend to consider, it should be noted that it does not accurately reflect its actual value. 

Especially because forked and pre-mined coins have a remarkable impact on the entire market valuation. It is also worth highlighting that market capitalization does not imply an infusion of funds. It is simply an assessment based on the current market price and circulating supply.