For the uninitiated (aka normies), blockchain is almost synonymous with Bitcoin — a cryptocurrency created in 2008 with a finite supply of 21 million tokens. While technically it’s not the very first cryptocurrency built on blockchain, Bitcoin ($BTC) remains the oldest surviving crypto, the most influential, and the token with the largest market capitalisation.
It’s obvious that Bitcoin dominates the public dialogue about crypto, but what exactly does Bitcoin dominance mean, and how should it shape your investing strategy?
Bitcoin dominance explained.
The share of Bitcoin’s value in relation to the value of all crypto tokens on the market is known as Bitcoin dominance. The metric is a proxy for Bitcoin’s strength at any given time, which can be used to assess market sentiment and forecast trends.
Originally touted as the future of trust-less digital payments, Bitcoin has largely found a place in portfolios as a store of value and speculative investment. Given its limited supply and disinflationary supply schedule — where the reward for mining each block is halved approximately every four years — Bitcoin has the potential to continue rising in value as its scarcity increases. That’s why BTC is often called ‘digital gold’.
But greed and fear of missing out (FOMO) plays a big role too. When the crypto hype cycle ramps up, money pours into Bitcoin first, which sees Bitcoin dominance increase.
Bitcoin’s position as the original, top dog of the crypto ecosystem is so ingrained that all other coins are collectively called altcoins, a portmanteau of ‘alternative’ and ‘coins’.
When Bitcoin dominance goes down, it’s usually because investors move their money from Bitcoin into altcoins with a smaller market cap. Capital rotation is a natural part of the crypto market cycle — once BTC prices are pushed high enough, people look to take profits and reinvest in other tokens where the opportunity for growth may be bigger.
How to Calculate BTC Dominance?
Here’s how to calculate the ratio of Bitcoin’s dominance compared to altcoins:
Bitcoin dominance % = Bitcoin market capitalisation ÷ Overall crypto market capitalisation.
At the time of writing, CoinMarketCap put the total crypto market cap at US$2.72 billion, and BTC’s market cap at $1.69 billion.
1.69b ÷ 2.72b = 0.621 (multiply by 100 to get percentage) = Bitcoin dominance of 62.1%
Another way to measure Bitcoin dominance is by excluding ICOs and stablecoins from the total market cap figure — which is known as ‘real Bitcoin dominance’.
What’s Happening When Bitcoin Dominance Rises?
Market capitalisation is a product of the total number of coins in circulation multiplied by the price per coin. Increased demand for Bitcoin that increases its token value may also increase its dominance, but it depends on the extent to which the whole market is lifting in value.
When Bitcoin’s is highly dominant — attracting a greater chunk of investor’s funds relative to altcoins — it can indicate:
- A greater confidence in Bitcoin due to positive news/sentiment, e.g., the announcement of a US Bitcoin strategic reserve.
- A more cautious market. People tend to back Bitcoin when other digital assets seem less reliable, because BTC is a proven entity (although still relatively volatile).
BTC’s price can be in decline even as its dominance increases. Typically that would indicate the total crypto market is experiencing bearish conditions.
How Does Falling Bitcoin Dominance Impact Crypto Markets?
When Bitcoin dominance wanes in a strong market, it means BTC is being outperformed by the value of altcoins. As momentum grows during a bull market phase, the timing can be right for a so-called ‘alt season’, where mega cap tokens like BTC and Ether are exchanged for cheaper, smaller tokens.
A broadening of investor interest across altcoins, leading to rising altcoin prices, means Bitcoin dominance drops.
How to Use Bitcoin Dominance to Guide Investing?
Bitcoin dominance can work as a temperature gauge — how is money moving across the market and is your risk-return potential better in BTC, alts or other traditional assets? It can also help you weigh up other trend indicators and BTC price predictions.
Whether you buy or sell will depend on your strategy and risk appetite. For instance, you might choose to accumulate more Bitcoin in anticipation of BTC prices peaking (when you can take profits) or because you forsee altcoin prices falling.
You might start buying altcoins if you believe Bitcoin dominance will soon reverse to create the right conditions for alt prices to surge. But predicting when Bitcoin dominance will top out, to guide altcoin investments, isn’t easy.
History of Bitcoin Dominance: Ups and Downs Over Time
As a long-standing token, Bitcoin’s adoption has had time to reach a critical mass, making it the default.
Entrepreneur and digital assets investor Marc Andreessen pointed to the token’s potential to take hold back in 2014. He said “Bitcoin is a classic network effect, a positive feedback loop. The more people who use Bitcoin, the more valuable Bitcoin is for everyone who uses it, and the higher the incentive for the next user to start using the technology.”
When the crypto market was less mature, Bitcoin dominance was consistently in the 80-90% range. But the number has fluctuated below that mark ever since 2017.
Bitcoin dominance since 2013. Source: The Block.
You can see from this chart of Bitcoin dominance that it fell considerably in 2017, 2018 and 2021:
- 2017: Ethereum ($ETH) gained mainstream attention, amid an explosion of other initial coin offerings (ICOs) in 2017. ETH started 2017 valued at less than $10 and by December it was trading at over $800.
- 2018: The speculative bubble ended and prices crashed. Many ICOs fell dramatically in price or disappeared entirely.
- 2021: A resurgence of interest in crypto triggered by the Covid-19 pandemic saw Bitcoin dominance increase, but it fell again as activity on the Ethereum network once again took off.
The subsequent bear market of 2022 saw Bitcoin dominance regain some ground as a series of unfortunate events (e.g., the collapse of LUNA and the FTX exchange), spooked the market.
Bitcoin Dominance Ratio in 2024 and 2025
Within the past few years, Bitcoin dominance hasn’t returned to the Covid-era high of around 70%. But it seems to be trending upwards.
In 2024, the price of Bitcoin more than doubled and broke the US$100,000 mark for the first time largely driven by:
- Bitcoin’s fourth halving event in April 2024.
- Inflows into spot Bitcoin exchange-traded funds (ETFs).
- An emphatically pro-crypto campaign from Donald Trump and his re-election in November.
- Regulatory changes and rumours of a strategic bitcoin reserve in the US (which came to pass).
These positive events have led to Bitcoin dominance reaching its current rate of over 62%.
Crypto analyst Benjamin Cowen said in March 2025 that when you exclude stablecoins, it shows that Bitcoin dominance last bottomed out in May of 2021. He thinks it could keep getting higher in 2025.
Why Pay Attention to Bitcoin Dominance?
We may see the day when the adoption of utility coins and allocations to stablecoins contribute to a fundamental weakening of Bitcoin’s share of the market.
But today, with Bitcoin being so big, and so popular, it makes sense to keep tabs on its influence on the crypto market. Just keep in mind, it’s only one indicator of changing market conditions.
