BITCOIN DOMINANCE (10% to @Tron-Fan-Club)

Hello everyone,

I'm delighted to be a member of this community and today I would like us to talk about Bitcoin dominance.

WHAT IS BITCOIN DOMINANCE

In other to understand what Bitcoin dominance is all about, we will have to first look at market capitalization.

Cryptocurrency market capitalization is simply the total number of circulating cryptocurrencies multiplied by the current prices and according to coinmarketcap, the current cryptocurrency market capitalization is $953,527,326,156.665.

Similar to the above calculation, the Bitcoin market capitalization is calculated by multiplying the Bitcoin circulating supply with the current price of Bitcoin. And that will bring us to a current $408,611,823,629 market capitalization for Bitcoin.

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Using the above data, we can calculate the Bitcoin dominance using the below formula.

_{Bitcoin Dominance = BTC Market cap} / _{Total crypto market cap X 100/1}

_{Bitcoin dominance = 408,661,823,629}/_{953,527,326,156.665 X 100/1}

Bitcoin dominance = 43.2%

From the above calculation, we will see that Bitcoin is currently dominating other cryptocurrencies regarded as altcoins with a percentage of 43.2%. This percentage use to be high up to about 90% before the explosion of altcoins.

FACTORS AFFECTING BITCOIN DOMINANCE

• Trend

Trend is one of the factors affecting Bitcoin dominance. Just like I previously stated, before the increase in popularity of altcoins, the Bitcoin dominance use to soar as high as 90%. But since the increase in altcoin investment due to several fascinating usecases that serval altcoin possesses, the Bitcoin dominance has drastically dropped.

Some of the things attracting investors to altcoins has been the emergence of Metaverse, NFTs, faster transaction, scalability, etc.

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• Bull and bear market

The market condition plays a major role on the Bitcoin dominance. Since the increase in popularity of stablecoins, investors has taken it to be a safe heaven during unfavorable market conditions (bear market). The conversion of several assets to stablecoins during bear market affects the dominance of Bitcoin.

Also, during the bull market, most investors tends to take the risk of investing in more volatile altcoins other than Bitcoin. This choice of investing in altcoins during bull runs also affects the Bitcoin dominance.

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• Cryptocurrency trading

Since the increase in popularity of cryptocurrency trading, users tend to hold more stablecoins because there allows them to easily buy and sell different cryptocurrency assets on various exchanges.

Converting from Bitcoin to these stablecoins such as USDT, affects the dominance of Bitcoin.

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• Emergence of new coins

We already know that any cryptocurrency that is not Bitcoin is regarded as an altcoin. And we have already known that the Bitcoin dominance is calculated by dividing the Bitcoin market cap with that of the entire cryptocurrency market cap.

This shows that with the emergence of new coins, the market capitalization of the entire cryptocurrency increases and will apparently lead to the reduction in Bitcoin dominance.

USES/IMPORTANCE OF BITCOIN DOMINANCE

• Spotting altcoin season

Altcoin seasons are periods whereby altcoins are generally out performing Bitcoin. This period can be spotted using the percentage of Bitcoin dominance.

Traders who actively trade cryptocurrencies can use the Bitcoin dominance in spotting when there's a high possibility of altcoin boom.

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• Making trading decision

A general trading decision can be made by considering the Bitcoin dominance. When the price the price of Bitcoin is increasing and the dominance is decreasing, this indicates that the altcoins are currently out performing Bitcoin despite the good performance of Bitcoin.

Also, when the Bitcoin dominance and Bitcoin price are both increasing, it shows that Bitcoin is currently over performing altcoins. This helps traders in making investment decision.

CONCLUSION

The Bitcoin is the first cryptocurrency which was created with the aim of restructuring how monetary transactions are performed. This makes the Bitcoin very popular thus leading to the wide adoption of the digital currency.

Since the creation of other cryptocurrencies which are regarded as altcoins, the Bitcoin dominance has thus been tampered with. It's dormaince has not been static ever since with its increase and reduction dependent on several factors which we have already discussed above.