Bitcoin Dominance vs Altcoins

Track all markets on TradingView

Bitcoin dominance is a crucial indicator for comparing Bitcoin’s market capitalization against the combined value of all altcoins. This metric not only reflects Bitcoin’s financial health but also indicates the level of risk investors are taking with altcoins.

Altcoins Season and Its Impact

During what many in the crypto community refer to as “altcoin seasons,” the market sees a surge in investments in altcoins. These periods often occur when investors feel bullish about the market’s future and look for higher returns outside the more stable Bitcoin. Altcoin seasons can lead to significant decreases in Bitcoin dominance, as was evident during:

  • 2017/2018 Bull Run: Investors diversified their portfolios beyond Bitcoin into altcoins, hoping for higher returns. Tokens like Ripple and Ethereum saw unprecedented gains during this time.
  • The Surge of Utility Tokens (2019): Many utility tokens, which provided actual functionalities and services within their respective platforms, garnered significant interest, pulling away market share from Bitcoin.
  • DeFi and Yield Farming (2020): The yield farming craze saw investors flock to new DeFi projects, significantly affecting Bitcoin’s dominance as these projects offered high returns.

Analyzing Altcoin Fluctuations

Altcoin markets are generally more volatile than Bitcoin. This volatility is influenced by factors such as technological advancements, regulatory news, and market sentiment. Investors need to be cautious, as the high potential for returns comes with increased risks. Understanding Bitcoin dominance can help manage these risks, as shifts in dominance can indicate changing market conditions.

Scroll to Top