What is Dominance: An important indicator that controls Bitcoin market trends

BTC Dominance (btc.d or DOM) is an essential concept if you want to gain a deeper understanding of the cryptocurrency market. It measures the proportion of Bitcoin’s market capitalization relative to the entire crypto market, helping you identify important signals about Bitcoin’s strength compared to other altcoins.

Understanding what dominance is will help you make more informed investment decisions. This index is not just a statistical figure; it also reflects market sentiment and capital flow trends among investors.

What is Dominance: Basic Definition

BTC Dominance is calculated by dividing Bitcoin’s market cap by the total market cap of all cryptocurrencies, then multiplying by 100 to get a percentage. For example: if Bitcoin’s market cap is $9 billion and the total market cap is $10 billion, then dominance = 9 ÷ (9 + 1) × 100 = 90%.

This index indicates Bitcoin’s absolute dominance in the market. In the past, before Ethereum was launched, Bitcoin held over 90% of the total market cap. As of February 2026, dominance stands at 55.80%, showing that the market has become more evenly distributed among different projects.

Why Bitcoin is Considered the “King” of the Market

Bitcoin is regarded as the “original currency” of the entire crypto ecosystem. To participate in the crypto market, most investors first buy Bitcoin or USDT. When altcoins experience sharp declines, many move their funds back into Bitcoin or USDT to preserve capital.

Bitcoin’s influence over altcoins is significant. When Bitcoin’s price rises, the entire market often follows suit. Conversely, when Bitcoin drops, altcoins tend to be affected more severely. Therefore, monitoring what dominance is and its trend is a crucial step that every trader should take.

Four Market Scenarios Based on Dominance

In the crypto market, the following four situations often occur repeatedly, each with its own meaning:

Scenario 1: Bitcoin rises, the entire market rises

This is the most positive scenario that any investor hopes for. Market confidence strengthens, large institutions and funds pour money into both Bitcoin and promising altcoins. Dominance may stay stable or increase slightly.

Scenario 2: Bitcoin rises, altcoins fall

Funds flow from altcoins into Bitcoin, or new investors only buy Bitcoin without entering altcoins. In this case, dominance increases significantly. This is a tough phase for altcoins, but a healthy opportunity for projects with real potential to prove their value.

Scenario 3: Bitcoin falls, the entire market declines

This is a negative scenario. When the “king” weakens, the entire “kingdom” shakes. Investors panic and sell off both Bitcoin and altcoins, with capital flowing out of the market.

Scenario 4: Bitcoin moves sideways or slightly down, altcoins rise

In this situation, dominance decreases. Bitcoin is consolidating strength for the next upward move, while funds flow from Bitcoin into altcoins. This phase often lasts 1-2 years and is considered the “altcoin season” that traders focusing on altcoins eagerly await.

Strategies When Dominance Rises

When the dominance index increases, you need to distinguish whether Bitcoin is actually rising in price:

If dominance increases AND Bitcoin surges: This is a very positive signal. Market confidence returns, large investors pour capital into Bitcoin. At this point, you can hold Bitcoin or look for high-quality altcoins with breakout potential.

If dominance increases but Bitcoin declines: Altcoins will likely decline even more. To avoid significant losses, many investors sell altcoins to buy USDT. This is not an ideal time to enter the market.

If dominance decreases and Bitcoin rises: Most altcoins will also increase, often more sharply than Bitcoin. This is the “altcoin season” that traders are waiting for.

If dominance decreases and Bitcoin also declines: You should closely monitor capital flow. Altcoins may decline along with Bitcoin in the short term, but could rebound quickly afterward if capital shifts from Bitcoin into altcoins.

Historical Dominance from 2016 to Present

To better understand what dominance is, reviewing historical milestones is very helpful:

2016 - Bitcoin’s Golden Age Bitcoin was below $100, Ethereum had not yet launched (or was just emerging), and Bitcoin held over 90% of the market cap. This was the era when Bitcoin was “everything” in the market.

2017 - ICO Boom Bitcoin entered a strong growth phase. Simultaneously, ICO projects exploded, and demand for Ethereum surged because most ICOs were built on Ethereum. Dominance dropped to just 35%, the lowest at that time. Ethereum accounted for about 30% of the market cap.

Late 2017 - Bitcoin Peaks Bitcoin reached $20,000, and market confidence hit an all-time high. Dominance recovered to 65%, the highest since Ethereum’s emergence.

January 2018 - Crash Major funds took huge profits from Bitcoin, pouring into altcoins. Later, they sold off altcoins, creating a massive sell-off. Dominance fell to just 33%.

April-July 2018 - Slight Recovery News from SEC and price increases from $6,000 to $9,800 helped dominance recover to nearly 45%.

Late 2018 - Prolonged Decline Bitcoin experienced a prolonged downturn, but dominance remained around 50%, indicating Bitcoin was still preferred over altcoins.

2020-2021 - Bull Run In March 2020, Bitcoin dropped to $3,800. It then began a remarkable recovery, reaching $41,000 by late 2020 and early 2021. Dominance surged to nearly 74%, showing Bitcoin regaining market control.

Current Dominance: Status in 2026

As of February 2026, BTC Dominance stands at 55.80%. This indicates a more mature market, with capital more evenly distributed among various projects. Bitcoin remains the leader, but altcoins have established a solid presence.

To get a comprehensive market view, you should consider not only BTC Dominance but also other indicators like TOTAL (total market cap), TOTAL2 (altcoin market cap), DeFi index, or USDT.D. This requires practical experience and the ability to sense capital flows, which can be challenging for new investors entering the space.