The Bitcoin Dominance Index indicates the market capitalization ratio of Bitcoin to the total market capitalization of all other cryptocurrencies. This index is calculated by dividing the market cap of BTC by the total market cap of the market, then multiplying the result by 100, providing an accurate measure of Bitcoin's control over the market as a whole.
When this index falls, part of the liquidity shifts towards alternative currencies (Altcoins), seeking higher profit opportunities and diversifying the investment portfolio. History shows that periods of declining Bitcoin dominance often coincide with significant price increases in altcoins, as traders benefit from the rotation of capital away from BTC to assets with potentially higher returns.
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Innovative opportunities and strategies
1. Monitor entry levels
Use TradingView or Glassnode to track the dominance index movements in real-time.
When the index falls below 55%-54%, this may form an ideal entry point for some strong altcoins.
2. Smart diversification with Binance Earn
While waiting for liquidity rotation, invest a portion of BTC or USDT in Flexible Savings products to earn steady returns without giving up liquidity.
3. Monitor on-chain data
According to Santiment data, changes in the number of active addresses and the on-chain trading ratio can provide early signals for liquidity shifting to altcoins.
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Have you tried monitoring the Bitcoin Dominance Index in your trades? Share your experience and the best altcoins you benefited from!