Cryptocurrency dominance chart

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Depending on the current trend, there may be more interest and trading around a particular type of crypto project. In this case, the sectors these altcoins represent may not matter as much as the potential profits. Bull or bear market Over the last several years, there has been a general rise in the popularity of stablecoins, a trend that exerted sustained pressure on BTC dominance. A stablecoin is an altcoin designed to maintain value equal to that of an asset with a more stable price, such as a fiat currency or commodity.

Crypto investors and traders often use stablecoins to lock in profits without having to convert their crypto to fiat. The inverse is likely in a bull market. When the market is up, traders can be incentivized to move value from stablecoins into more volatile assets that offer more trading opportunities, like bitcoin. However, emboldened traders may also choose riskier options and pump liquidity into altcoins that are even more volatile than BTC , so the overall effects of favorable market conditions on bitcoin dominance are highly context-dependent.

On-ramping via stablecoins Stablecoins offer a convenient way to access a wide variety of cryptocurrencies compared to using fiat. This is because while there are fiat-to-crypto exchanges called gateway exchanges, they can be restrictive and only offer the more popular cryptocurrencies and stablecoins.

Crypto-to-crypto exchanges, however, often provide a more comprehensive selection of cryptocurrencies tradable with select stablecoins. Hence, people who want to trade specific cryptocurrencies may enter the market via stablecoins.

Naturally, if a significant amount of new funds enter the market through stablecoins and not bitcoin , the total value of the crypto market increases, causing a dilution in BTC dominance. Emergence of new coins Sometimes, new coins that enter the market can gain popularity quickly, causing BTC dominance to decrease. If that happens and funds are moved from these altcoins to BTC or out of the crypto market entirely, BTC dominance may rise again.

Using BTC dominance with current bitcoin price Some people monitor bitcoin price along with bitcoin dominance to help them make trading decisions. What is Bitcoin dominance? The Bitcoin dominance metric shows how much of the total cryptocurrency market cap is represented by Bitcoin.

Since it is the largest cryptocurrency by market cap, Bitcoin dominance is a useful metric that shows us if confidence in more speculative altcoins is growing or falling. We calculate Bitcoin dominance by dividing the total cryptocurrency market cap with the market cap of Bitcoin.

How is total cryptocurrency volume calculated?