Deciphering the Shift in the Cryptocurrency Market: A Practical Guide to Bitcoin Dominance

From 2024 to 2025, the cryptocurrency market experienced unprecedented levels of complexity and diversity. The approval of Bitcoin spot ETFs, the rapid rise of AI-related tokens, the full-scale development of DeFi 2.0, and the emergence of meme coins one after another. Recognizing how important the indicator of Bitcoin dominance is in deciphering these major market shifts is a reminder of its significance.

Table of Contents

• [The Essence of Bitcoin Dominance](#The Essence of Bitcoin Dominance)
• [Detecting Market Fluctuation Signs](#Detecting Market Fluctuation Signs)
• [Chart Analysis Tips](#Chart Analysis Tips)
• [Implications for Altcoin Investment](#Implications for Altcoin Investment)
• [Practical Trading Methods](#Practical Trading Methods)
• [Answers to Common Questions](#Answers to Common Questions)
• [In Conclusion](#In Conclusion)

The Essence of Bitcoin Dominance

Cryptocurrency dominance, especially BTC.D, is an indicator that represents the market capitalization ratio of Bitcoin within the entire crypto asset market. In simple terms, it is a barometer showing how trillions of yen worth of funds move between Bitcoin and altcoins.

The calculation formula is as follows:

BTC Dominance = Bitcoin Market Cap / Total Cryptocurrency Market Cap × 100%

Looking at actual data, during the ICO boom of 2017, it dropped to 32%, but after the COVID-19 shock in 2020, it rose to over 70%. Behind this simple number are all market-influencing factors such as investor psychology, regulatory environment, technological innovation, and institutional investor trends.

The latest data shows that Bitcoin’s market share is at 55.86%, indicating that the market maintains a moderate risk appetite.

Detecting Market Fluctuation Signs

Tracking Bitcoin dominance is not just about statistics; it’s a way to grasp market psychology.

This indicator is a crucial compass for determining whether the market is leaning toward “Bitcoin season” (safe-haven, defensive) or “Altcoin season” (risk-seeking, aggressive).

Characteristics of Bitcoin Season:

• Investors tend to feel anxious
• Funds are concentrated in BTC
• The overall market tends to be defensive

Characteristics of Altcoin Season:

• Active pursuit of higher returns
• The entire market is dominated by bullish sentiment
• Funds flow into various altcoins

2025, in particular, was a year where fund inflows into AI-related projects caused Bitcoin dominance to fluctuate more significantly. This phenomenon strongly suggests that the market is shifting toward innovation-oriented investments.

Chart Analysis Tips

Major platforms for real-time tracking of Bitcoin dominance include:

• TradingView — Chart display with ticker “BTC.D”
• CoinMarketCap — In the “Global Charts” section
• CoinGecko — “Market Cap Dominance” page

When interpreting charts, it’s essential to understand these three basic patterns:

Rising Trend Meaning Indicates selective investment in Bitcoin is ongoing. It can be interpreted as market participants starting to shift from risk assets to stable assets.

Falling Trend Meaning Signifies accelerated fund dispersion into altcoins. It reflects an increased risk appetite and growing interest in innovative projects.

Sideways Movement Warning Signal Represents market hesitation and uncertainty about the future, often preceding a major trend reversal. Combining Bitcoin price movements with changes in the market cap of other assets allows for more precise understanding of the current market cycle.

Implications for Altcoin Investment

Fluctuations in Bitcoin dominance have a direct and dramatic impact on the altcoin market. Understanding this relationship is key to successful altcoin investing.

Market Reaction During Dominance Rise

When BTC dominance enters an upward trend, the altcoin market faces strong headwinds. Typically, altcoins tend to decline against both USD and BTC.

As risk aversion among investors intensifies, overall market liquidity decreases, and smaller market cap tokens face severe selling pressure. This is a classic example of the “flight to quality” phenomenon in financial markets, where investors move funds from uncertain assets to the most trusted Bitcoin.

Market Opportunities During Dominance Decline

When BTC dominance begins to decline, many altcoins start to grow rapidly, creating short- to medium-term opportunities for astonishing returns. As risk appetite increases, interest concentrates on innovative projects and new technological trends, leading to a lively market.

In past altcoin seasons, tokens with relatively small market caps have recorded 2x to 10x, and sometimes over 50x returns in a short period. However, such rapid rises often lack sustainability, so taking profits at the right timing is extremely important.

Practical Trading Methods

The most important principle when using dominance as an investment decision is “not relying solely on a single indicator.” Combining Bitcoin price, volume, and altcoin fund flows makes it clearer which direction the market is leaning.

To improve success rates, avoid analyzing dominance alone; it’s essential to integrate multiple technical indicators such as RSI, volume, and volatility. Especially near altcoin season peaks, rapid declines in dominance are rarely sustained, so strategic profit-taking is crucial.

Building a Trend-following Strategy

If a sustained increase in BTC dominance is clearly confirmed, it’s wise to consider gradually reducing altcoin positions. This movement suggests the overall market is shifting into risk-reduction mode, and the relative risk of altcoins is increasing.

Conversely, if a clear downward trend in dominance is verified, it indicates expanding opportunities for selective altcoin investments.

Using Divergence Analysis

A situation where Bitcoin price is falling but dominance is rising indicates strong selling pressure on altcoins, requiring cautious position management.

On the other hand, simultaneous rise in Bitcoin price and decline in dominance often signals market expansion and capital inflow into altcoins, a bullish sign.

Answers to Common Questions

Q: What is the dominance level that indicates the start of a full-fledged altcoin season?

A: Generally, when it falls below 45%, a full-scale altcoin rally tends to begin. This level often functions as a psychological turning point.

Q: Is it possible for BTC dominance to fall below 30%?

A: It has not been observed in past records, but if the altcoin ecosystem undergoes significant evolution and widespread adoption, it could theoretically happen.

Q: Does dominance serve as a concrete trading signal?

A: Yes. When combined with Bitcoin price, volume indicators, and trend lines, it can be an effective tool for buy/sell decisions.

In Conclusion

Bitcoin dominance is an indispensable indicator for understanding the overall market trend. As detailed in this article, behind simple numbers are trillions of yen in fund movements and the psychology of millions of investors.

When devising actual investment strategies, what matters most is not the absolute value of dominance but the direction and speed of its change. Rapid shifts often signal market turning points, while gradual changes indicate the continuation of long-term trends.

Additionally, from past data, it’s important to recognize that around 50% often functions as a key resistance and support level. A deep understanding of Bitcoin dominance and the market’s interconnectedness enables the development of more precise and effective investment strategies.