Bitcoin Dominance (BTCD) refers to how much of the total cryptocurrency market is comprises of bitcoin (BTC). It is measured as a ratio between the market capitalization of BTC against all other cryptocurrencies.
The purpose of this comparison is to illustrate how much stronger Bitcoin is in contrast to the other altcoins on the market. The stronger the BTCD is, the weaker all other cryptocurrencies are in contrast, because their value diminishes against BTC. It is calculated as the BTC values (USD) /
Of course, while it initially did not matter in the beginnings of the cryptocurrency space, its position vis-à-vis the altcoins became more significant as more and more altcoins entered the market. As of May 31st, 2022, there were over 19,650 cryptocurrencies listed on CoinMarketCap. At the time, BTC had a market cap of $601 Billion USD with a dominance of 46%, with Ethereum following at 18.2%.
What is a market cap?
Traditionally, market capitalization, or ‘market cap,’ refers to the total value of a companies shares or stock. It is calculated by taking the value of each share or stock and then multiplying it by the total number of stocks or shares that there are. It is the primary way in which investors can compare the value of one company against another.
What does market cap mean for cryptocurrency?
For cryptocurrency, the market cap refers to the total value of all cryptocurrencies. It is calculated by taking into account the number of each cryptocurrency and altcoin that there is and multiplying them by each one’s individual market price and then adding each total together. This cryptocurrency market cap total is then what the BTC market cap is calculated against to establish the BTCD.
The is a subject of much debate among cryptocurrency investors and economists, as many will argue that with the great fluctuations of value of cryptocurrencies, as well as their varying functionality. Therefore, using current cryptocurrency market caps as a basis for investment is not always the best indicator of safe investment choices. This especially true since cryptocurrencies are so new and prone to both bull and bear runs. Furthermore, there is a lot of unknown as to what will happen once the 21 million bitcoin cap is reached. Will the hype die down after the initial value spike, or will the bitcoin become more established and reach a more consistent value? There are also other factors that will impact the future and value of cryptocurrencies such as governmental regulations and failure to implement a real-world use for cryptocurrencies.