Maximizing Returns in the Cryptocurrency Market with Bitcoin Dominance
Introduce about bitcoin dominance
2025-11-09
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If you’re a cryptocurrency investor, you’ve likely heard the term “Bitcoin Dominance” at least once. This metric plays a crucial role in understanding capital flows in the cryptocurrency market and developing investment strategies. By understanding the correlation between Bitcoin prices and altcoins, you can predict market movements and maximize returns. Let’s explore everything about Bitcoin Dominance together.
Definition and Basic Concepts of Bitcoin Dominance
Bitcoin Dominance (BTCD or BTC.D) is an indicator that represents Bitcoin’s share of the total cryptocurrency market as a percentage. The calculation is simple: divide Bitcoin’s market capitalization by the total cryptocurrency market capitalization and multiply by 100.
Bitcoin Dominance (%) = (Bitcoin Market Cap ÷ Total Cryptocurrency Market Cap) × 100
The higher this figure, the greater Bitcoin’s influence in the market. Conversely, when it decreases, it signals that altcoins are gaining market share. Investors can use this indicator to understand how market capital flows between Bitcoin and altcoins.
Bitcoin Dominance goes beyond a simple number—it’s a barometer that shows the psychology and capital flows of the cryptocurrency market. It’s an essential indicator for understanding the correlation between Bitcoin prices and the altcoin market, and an important tool for predicting market trends.
Historical Changes and Current Levels of Bitcoin Dominance
Bitcoin Dominance has undergone dramatic changes alongside the development of the cryptocurrency market. When Bitcoin first appeared in 2009, it was the only cryptocurrency, so its dominance was 100%. However, as time passed and new coins emerged, market share changed.
During the 2017 ICO (Initial Coin Offering) frenzy, many altcoins flooded the market, causing Bitcoin Dominance to plummet to 40%. However, in 2020, with the pandemic, institutional investors showed interest in Bitcoin, and dominance recovered to over 70%.
Looking at recent 2025 data, dominance rose to 61.89% in March but then slightly declined to around 58% in October. After falling to around 40% following the FTX collapse, dominance has been showing a steady recovery trend. These fluctuations reflect changes in the Bitcoin market and investor psychology.
What Rising and Falling Dominance Means for the Market
The movement of Bitcoin Dominance provides important clues for understanding capital flows in the cryptocurrency market. When dominance rises, it signals that market capital is flowing out of altcoins and into Bitcoin. This typically occurs during times of high uncertainty, meaning investors prefer the relatively safer Bitcoin.
Conversely, when dominance falls, it means capital is moving from Bitcoin to altcoins like Ethereum (ETH), Solana, and Ripple. This can be seen as a signal of “Alt Season.” It reflects investors’ willingness to take risks for higher returns.
Bitcoin Dominance is also an indicator that indirectly shows market psychology. Higher dominance can be interpreted as a more conservative market, while lower dominance suggests increased risk appetite among investors. This becomes important reference material when developing portfolio allocation strategies.
Dominance changes are also useful when predicting Bitcoin outlook. If dominance rises sharply while Bitcoin prices also increase, it can be seen as the start of a strong Bitcoin bull market. On the other hand, if dominance falls while Bitcoin prices rise, it’s likely that an Alt Season is underway, where altcoins are growing faster.
Identifying Altcoin Season (Alt Season)
Alt Season refers to a period when Bitcoin Dominance falls while altcoins rise faster than Bitcoin. Accurately identifying this period is key to maximizing returns. The main signal that Alt Season is beginning is a pattern of sustained decline in Bitcoin Dominance alongside steady rises in altcoin prices.
Looking at the current situation in 2025, dominance has fallen to around 56%, and Layer 1 coins are showing strength. A typical Alt Season pattern is emerging, with strength progressing from major altcoins like Ethereum, to mid-cap coins like Solana, and even to meme coins.
When identifying Alt Season, you can use the following checklist:
- Has Bitcoin Dominance shown a declining trend for at least 3 weeks?
- Are altcoins rising while Bitcoin prices remain stable?
- Are 70% or more of the top 10 altcoins showing higher returns compared to Bitcoin?
- Are small-cap altcoins also rising along with increased trading volume?
- Is the altcoin Kimchi Premium higher than the Bitcoin Kimchi Premium?
If 3 or more of these conditions are met, Alt Season can be considered underway. However, it’s important to verify whether this is a structural capital shift rather than a simple rebound. Short-term traders should react quickly to early Alt Season signals, while long-term investors may find it effective to wait until the trend becomes clear.
Strategies to Maximize Returns Using Bitcoin Dominance
Investment strategies using Bitcoin Dominance are highly effective for allocating assets according to market flows. The basic strategy is to increase Bitcoin allocation when dominance is above 60%, and expand altcoin allocation when it falls below 50%.
Contrarian trading methods are also effective. When dominance is extremely high (e.g., above 70%), altcoins are likely oversold, so consider investing some capital in quality altcoins. Conversely, when dominance is very low (below 40%), it may be safer to move some capital from altcoins to Bitcoin.
Following long-term trends is also useful. An upward trend in dominance suggests Bitcoin strength, while a downward trend suggests altcoin opportunities. Below is an asset allocation guide by dominance level:
Dollar-cost averaging techniques are also important. Adjust positions gradually based on key resistance levels (e.g., 60%, 65%) and support levels (e.g., 50%, 45%) of dominance. Also consider Bitcoin news and market events.
Risk hedging is essential. When Bitcoin Dominance suddenly starts to rise, it’s good to set stop-loss timing for altcoins in advance. Automated strategies using Kimchi Premium bots can also be considered.
Practical Trading Checklist and Execution Techniques
For practical investment using Bitcoin Dominance, systematic checklists and execution techniques are necessary. Key monitoring items to check daily are Bitcoin Dominance levels, daily/weekly change rates, and major technical support/resistance levels.
When identifying entry signals, pay attention to the divergence between dominance and Bitcoin prices. If dominance is falling while Bitcoin prices are rising, it’s a good time to consider buying altcoins. Conversely, if dominance is rising while Bitcoin prices are falling, it can be seen as a bearish signal for the altcoin market.
Setting exit signals is also important. When dominance breaks through a certain level (e.g., 65%), it’s safer to reduce altcoin allocation. If Bitcoin prices plummet while dominance surges, this could be a signal of “panic selling,” so it’s better to wait for the market to stabilize rather than making hasty decisions.
Parallel analysis with auxiliary indicators also improves accuracy. Apply technical indicators like RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) to the dominance chart for combined analysis. For example, if dominance RSI falls below 30, indicating oversold conditions, a rebound is likely soon.
You should also understand the correlation between news events and dominance. Predict and prepare for the impact of macroeconomic events like the U.S. Federal Reserve’s interest rate decisions and cryptocurrency regulatory announcements from various countries on dominance. Major events like Bitcoin ETF approvals or halvings can bring significant changes to dominance.
Investment Precautions and Risk Management
Bitcoin Dominance is a useful indicator, but it shouldn’t be blindly trusted. It’s merely a statistical indicator, so it should be used alongside multi-faceted analysis. Look at the market from various angles: technical analysis, fundamental factors, market psychology, and more.
During altcoin dominance upswings, profitability can be high, but losses can also occur quickly. Especially during market downturns, altcoins tend to fall more sharply than Bitcoin. Therefore, when investing in altcoins, set stricter stop-loss rules.
Regulatory risks should always be kept in mind. Changes in government cryptocurrency regulatory policies can suddenly reverse dominance trends. Regulatory movements in major countries like the U.S., China, and South Korea have significant impacts on the market.
Strictly follow money management principles. Even if Bitcoin Dominance signals are clear, it’s safer to invest only a certain portion (e.g., 20-30%) of total assets. Manage risk by diversifying your portfolio across Bitcoin, large-cap altcoins, and mid/small-cap altcoins.
Finally, psychological management is important. Don’t make the mistake of ignoring dominance rise signals while intoxicated by Alt Season success. Markets always cycle, so guard against excessive optimism or pessimism and maintain an objective perspective. React sensitively to Bitcoin price and Kimchi Premium changes, but avoid emotional investment decisions.
Finding the Balance Point in Cryptocurrency Investment
Bitcoin Dominance is an important compass for understanding capital flows in the cryptocurrency market. To predict market volatility and maximize returns, you must effectively utilize this indicator. Develop asset allocation strategies based on dominance changes, and cultivate the insight to properly distinguish between Alt Season and Bitcoin bull markets. Above all, remember that objective investment decisions free from emotional influence and thorough risk management are the keys to long-term success.