Understanding Bitcoin Dominance and Its Impact on Altcoins
Bitcoin dominance refers to Bitcoin's market capitalization as a percentage of the entire cryptocurrency market. It serves as a key indicator of market sentiment and trends. When Bitcoin dominance rises, it typically signals a shift in investor focus towards Bitcoin, often leading to reduced liquidity and declining prices in altcoins. This scenario often occurs during market downturns or when Bitcoin is experiencing significant price rallies.
Conversely, when Bitcoin dominance decreases, it suggests growing interest in altcoins, often referred to as an "altcoin season." During these periods, altcoins tend to outperform Bitcoin as investors diversify their portfolios into emerging projects. Understanding BTC dominance helps traders navigate market cycles effectively.
