Understanding Bitcoin Dominance and Its Impact on the Cryptocurrency Market
Bitcoin dominance refers to the percentage of the total market cap of the cryptocurrency market that Bitcoin represents. This indicator is important because it often reflects investor sentiment and market trends. When Bitcoin dominance is high, it indicates that investors are favoring Bitcoin over altcoins, often due to perceived stability or a shift toward safe-haven assets during times of market instability. This can reduce liquidity and pressure altcoin prices, as capital flows into Bitcoin. Conversely, when Bitcoin dominance is low, it typically indicates increased interest in altcoins, which can lead to higher prices as investors seek higher returns from smaller, more volatile assets. Bitcoin dominance therefore serves as a dynamic market benchmark, influencing investment strategies and the overall health of the cryptocurrency ecosystem
