Bitcoin dominance or BTC dominance refers to the ratio of the market cap of Bitcoin to the remaining crypto assets in the crypto space. It is the percentage of the crypto market capitalization that is constituted solely by Bitcoin. The entire market capitalization of all the crypto assets is divided by the market value of Bitcoin to determine Bitcoin dominance.
Crypto traders and investors use Bitcoin dominance as one of the key metrics to understand the market with respect to Bitcoin. If the market share of Bitcoin increases, it indicates that the value of the altcoins shall decrease. Bitcoin is the most powerful player in the crypto industry since it is the first and most widely known crypto asset. Due to this, the entire market cap follows the trend being established by this crypto asset.
When BTC dominance is at a high, the value of altcoins in comparison to Bitcoin decreases. Traders advise to hold more Bitcoin as compared to altcoins when Bitcoin dominance increases. If Bitcoin dominance decreases, altcoins gain more value as compared to BTC. Traders advise to hold more altcoins if Bitcoin dominance is decreasing.