The post Understanding Bitcoin Dominance: A Simple Guide appeared on BitcoinEthereumNews.com.

Currently, Bitcoin dominance abbreviated as BTC dominance is among the most important indicators in the crypto market. It calculates the Bitcoin market capitalization against the entire crypto market capitalization. A lot of crypto investors and traders apply this in order to change their basic trading tactics and portfolio diversification. BTC dominance analysis can be useful in studying the overall market trend and making the right trading decisions. What is BTC Dominance? Bitcoin is the first and largest cryptocurrency by market capitalization. This crypto giant has always played a significant role in the crypto market. BTC dominance refers to Bitcoin’s share of the total cryptocurrency market value. It is calculated using the following formula: Bitcoin dominance = Bitcoin market cap/ Total cryptocurrency market cap Market capitalization is the total value of a particular asset. For Bitcoin, it is calculated by multiplying the current price of one Bitcoin by the total number of Bitcoins mined so far. Factors Influencing BTC Dominance Changing Trends To begin with, the Bitcoin share was more than 90% due to the fact that only Bitcoin was widely recognizable. However, as more altcoins (alternative cryptocurrencies) started to be developed, the percentage of Bitcoin began to decline. To what extent do various altcoins have different purpose and utility including DeFi, gaming, and art? For instance, the expansion of Non-Fungible Tokens (NFTs) led to some shift of funds from Bitcoin to NFT-related tokens, which resulted in a decline in BTC’s share. Bitcoin is rather one of the more stable and reliable forms of the cryptocurrency. Conversely, newer altcoins have large fluctuations between their prices and serve as having high profit for those who trade them. This shifting interest influences Bitcoin dominance because funds are taken to riskier altcoins. Bull and Bear Markets Another contributing factor is the emergence of stable…

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Filed under: News - @ August 1, 2024 3:10 am