From the Bitcoin Dominance Chart, the market trend: The ultimate indicator for mastering the crypto market

Since its inception in 2009, Bitcoin has consistently held the top spot in the crypto assets hierarchy. But do you know? Looking solely at BTC price is not enough; more importantly, we should consider its “weight” in the entire crypto market—that's what we commonly refer to as the Bitcoin Dominance index.

What is Bitcoin Dominance?

Simply put, Bitcoin Dominance is a measurement: the percentage of Bitcoin's market capitalization relative to the total crypto market cap.

The formula is straightforward: Bitcoin Dominance = BTC Market Cap ÷ Total Crypto Market Cap

Let's look at actual numbers. As of January 2026, BTC's circulating market cap reached $1.91019 trillion, accounting for 56.42% of the market. This means that over half of the funds in the crypto market are in Bitcoin.

Why do traders pay attention to this indicator?

Changes in Bitcoin Dominance directly reflect the flow of market funds. Here's a key pattern:

Bitcoin Dominance decreasing = More money flows into altcoins, market risk appetite increases

Bitcoin Dominance increasing = Funds flow back from altcoins to BTC, market begins to tighten and defend

The 2017 bull run is a classic example. When Bitcoin Dominance dropped from a high to a low of 37%, various altcoins surged—this is what people often call “Alt Season.” By 2018, as Bitcoin Dominance rebounded to 71%, altcoins collapsed one after another, and a bear market set in.

Now you understand why professional traders check the Bitcoin Dominance Chart daily. It’s like the stock market’s major index—it gives a quick read on market sentiment.

What factors influence BTC Dominance?

Simply put: Supply and demand.

But in the crypto market, the influencing factors are numerous:

Market sentiment — Traders' optimism/pessimism directly determines buying or selling. Those optimistic about the future hold their coins; pessimists rush to cut losses and exit.

News events — Policy favorable news, hacking incidents, institutional entry… any movement can change fund flows. For example, when Latin American countries announce adopting Bitcoin, BTC Dominance can spike.

Macro economy — Inflation, GDP, unemployment rates—these macro factors also matter. During economic downturns, some buy into crypto assets; during good times, funds may flow into traditional markets.

Explosion of new coins — In recent years, new projects have sprouted like mushrooms. More new coins mean the total market cap might grow, but BTC’s share can be diluted. That’s why Bitcoin Dominance tends to trend downward over the long term.

Pitfalls to watch out for when analyzing Bitcoin Dominance Chart

Here's a question: Is BTC Dominance really reliable?

Answer: It’s a useful reference, but don’t rely on it blindly.

Why? Several reasons:

First, the rapid growth of the altcoin market means 99% of new coins are junk projects. The explosion of new coins can artificially inflate total market cap, making BTC Dominance appear lower than it truly is.

Second, the rise of stablecoins has changed the market structure. USDT, USDC, and similar 1:1 dollar-pegged tokens now occupy a large portion of the market. Many traders no longer enter the market via BTC as in 2018 but prefer to park funds in stablecoins for safety. So, an increase in BTC Dominance doesn’t necessarily mean a bear market is coming; it could just be funds shifting between stablecoins and BTC.

Third, Ethereum’s (ETH) position is also changing. ETH’s market cap has reached approximately $399.49 billion, making it the second-largest asset in crypto. Relying solely on BTC Dominance can overlook the market movements of ETH and other key assets.

Can Bitcoin Dominance really predict Alt Season?

In theory, a decline in BTC Dominance = Alt Season is approaching. But in reality, it’s more complex.

The logic worked perfectly in 2017-2018. Today, it’s less accurate because:

1. Stablecoins have become a “third option.” Traders are not just switching between BTC and altcoins—they also move funds into stablecoins as an intermediary.

2. Different types of coins perform differently. DeFi tokens, NFTs, Layer 2 solutions… each has its own cycle, so it’s not one-size-fits-all.

3. There are too many new projects. Using BTC Dominance to predict the entire altcoin market is like using a broad stock index to predict a single junk stock—too coarse.

Is there really a “Real BTC Dominance” index?

Yes, some traders prefer the concept of “Real BTC Dominance.”

This metric compares only the market caps of BTC and proof-of-work (PoW) coins, excluding proof-of-stake (PoS) or other consensus mechanism tokens.

The reason: PoW coins are true competitors to BTC, as they share the same mining mechanism. Examples include Bitcoin Cash, Litecoin, Dogecoin.

This perspective makes sense logically, but some argue that ignoring PoS coins like Ethereum, which have larger market caps, is unreasonable.

Where to view the Bitcoin Dominance Chart?

Want to track BTC Dominance in real-time? Several major websites provide live data:

• CoinMarketCap — Has a Bitcoin Dominance Chart on the homepage, with historical data
• CoinGecko — Offers free downloads of BTC Dominance data
• TradingView — Preferred by professional traders, with advanced charting tools

All these platforms support custom timeframes—from daily to weekly to monthly views.

ETH Dominance Index also worth paying attention to

Since there’s a BTC Dominance Index, is there an ETH Dominance Index? Yes.

Calculation is similar: ETH Market Cap ÷ Total Crypto Market Cap

Currently, ETH Dominance is about 11.8% (based on ETH’s market cap of $399.49 billion). Many professional traders monitor both BTC and ETH Dominance to gauge the overall performance of small coins in the market.

Summary: How to use the Bitcoin Dominance Chart?

• Rising phase — Funds flow back into BTC, market risk increases, altcoins may face correction
• Falling phase — Risk appetite rises, funds explore new opportunities, but beware of scam projects
• High level (60%+) — Market is extremely bearish, funds hide in BTC for safety, possibly setting the stage for a rebound
• Low level (below 30%) — Market is overly speculative, risks are building, watch out for systemic risks

The key is not to over-interpret. The Bitcoin Dominance Chart is a reference tool; combine it with on-chain data, market sentiment, and macro factors to make reliable trading decisions. Focusing solely on one indicator often leads to being “liquidated.”