## Bitcoin Dominance Index (BTC Dominance) What Does It Really Mean?

If you are active in the cryptocurrency market but do not fully understand what BTC Dominance (DOM) is and its importance, this article will help you grasp the overall picture of the market.

### How Is Bitcoin's Market Share Defined?

BTC Dominance, also known as DOM, is an index reflecting Bitcoin's market capitalization percentage relative to the total market capitalization of the entire cryptocurrency market. In other words, it measures Bitcoin's strength and influence across the entire crypto ecosystem.

The calculation formula is very simple: BTC Dominance = (Bitcoin Market Cap) / (Total Market Cap) × 100%

For example, if Bitcoin's market cap is $9 billion and the total market cap is $18 billion, then DOM = 9/18 × 100% = 50%. Currently, this index fluctuates around 55.51%, indicating Bitcoin still holds a dominant position in the market.

### Four Market Scenarios You Need to Understand

To understand how the market operates and the impact of DOM, consider four main scenarios:

**Scenario 1: Bitcoin rises, the entire market rises accordingly**

This is the most ideal situation. When Bitcoin breaks out strongly, market confidence skyrockets, and institutional investors pour capital into Bitcoin as well as altcoins. Capital flows very strongly.

**Scenario 2: Bitcoin rises, but altcoins fall**

This is when capital from altcoins or external sources flows into Bitcoin in a focused manner. Investors sell off altcoins to buy Bitcoin, hoping to profit. In this case, DOM will increase.

**Scenario 3: Bitcoin falls, the entire market crashes**

This is a common scenario. When Bitcoin weakens, altcoins have no choice but to decline as well, sometimes even more sharply. It’s like a weakened king causing the entire court to tremble.

**Scenario 4: Bitcoin moves sideways, altcoins start to rise**

At this point, Bitcoin is "recovering," ready for the next rally. During this phase, altcoins can grow strongly. However, this period can last quite long, from 1-2 years depending on the market cycle.

### What To Do When BTC Dominance Rises?

When this index increases, it means capital from altcoins is being withdrawn to flow into Bitcoin. At this time, altcoins will find it difficult to grow strongly.

**Correct strategies:**

- Avoid overpaying for altcoins at high prices
- Prioritize buying and holding altcoins with strong fundamentals and real utility
- Pay attention to promising projects—those that demonstrate value and can break through Bitcoin
- Balance your portfolio between Bitcoin and carefully selected altcoins

Conversely, when DOM decreases and Bitcoin rises, most altcoins will also increase, often with even stronger growth than Bitcoin.

### Historical Volatility of Bitcoin Market Share Index

The development of BTC Dominance clearly reflects the growth process of the cryptocurrency market:

**2016 - Absolute dominance period**
Bitcoin was below $100. At that time, Ethereum did not exist, and Bitcoin accounted for over 90% of the market cap. It was Bitcoin’s golden age when it was almost the only currency in the market.

**2017 - ICO boom**
Bitcoin started to surge strongly. Mid-2017, the ICO wave exploded, causing DOM to drop to a low of only 35%. Ethereum reached 30% of the market cap due to soaring ETH demand for ICO participation.

**Late 2017 - Cycle peak**
DOM recovered strongly above 65%—the highest level at that time. Bitcoin skyrocketed to $20,000, boosting market confidence.

**Early 2018 - Collapse**
Whales took profits, shifted to altcoins, then sold off altcoins. This was the sharpest decline in history, with DOM falling to 33%.

**2018 - Recovery phase**
From April to July, DOM increased to nearly 45% as Bitcoin rose from $6,000 to $9,800.

**Late 2018 - Dark times**
Bitcoin plummeted, retail investors lost confidence. However, DOM remained around 50%, indicating Bitcoin’s underlying resilience.

**2020-2021 - Strong bullish cycle**
After the shock drop in March 2020 (Bitcoin fell to $3,800), the market rebounded strongly. Bitcoin reached $41,000 by late 2020 and early 2021, pushing DOM close to 74%.

**Currently (2025)**
DOM is at 55.51%, showing the market has matured with a balance between Bitcoin and altcoins.

### Not Just DOM - Keep an Eye on Other Indicators

To make accurate investment decisions, you should not rely solely on BTC Dominance. Consider additional metrics:

- **TOTAL**: Total market capitalization of all cryptocurrencies
- **TOTAL2**: Total market cap of all altcoins (excluding Bitcoin)
- **DeFi Index**: Trends of decentralized finance projects
- **USDT.D**: USDT dominance across the market

In reality, sensing capital flows and combining multiple indicators is a crucial skill to avoid getting "wrecked" in the crypto market. That’s why many new investors struggle—they do not understand the full market picture.

Therefore, always monitor BTC Dominance as an important guiding tool to stay ahead of crypto market trends.