Bitcoin dominance is described as the ratio between the market cap of Bitcoin to the rest of the cryptocurrency markets.
For many years, while Bitcoin was far and away the largest cryptocurrency - and one of the few in existence - its dominance was much closer to 100% than it is today. However, the Bitcoin dominance dropped significantly as new cryptocurrencies were created. This is probably related to the increased popularity of ICOs after the introduction of ETHereumand the ERC-20token standard.
Interestingly, Bitcoin dominance is often affected by the so-called “alt seasons”, in which altcoinsgain market share relative to Bitcoin, thus reducing Bitcoin’s dominance. Note, however, that Bitcoin dominance is not always directly affected by bullor bear markets because it is a ratio, not an absolute term. This means that if Bitcoin falls in price, but the rest of the cryptocurrency market falls at a similar rate, then Bitcoin dominance is likely to remain the same.
Although Bitcoin dominance is an interesting statistic to look at, one should keep in mind that it does not reflect its real value (especially because of forked and premined coins, which impact the total market cap in a very unnatural way). Also worth noting, that market cap does not mean an influx of money. It is just a measurement based on the circulating supply and current market price.
During the times when Bitcoin was the only cryptocurrency tradeable on exchanges, its dominance was roughly 100%. Today, with more cryptocurrencies in the space, its dominance is certainly less than 100%, but that is not necessarily a good or bad thing. It is only a tool that may give us a better perspective of how the crypto space is evolving.
Hope you can get a further understanding of Bitcoin dominance through this article.
