Bitcoin Dominance: Vital Rule of Thumb

The Role of Bitcoin Dominance

Bitcoin Dominance is a term used to describe Bitcoin's market share in the overall cryptocurrency market. This metric is calculated by taking Bitcoin's market capitalization and dividing it by the total market capitalization of all cryptocurrencies.

Bitcoin Dominance plays a crucial role in the cryptocurrency market as it provides insight into the relative strength of Bitcoin compared to other cryptocurrencies.

When Bitcoin Dominance is bottoming out and rising, it means that Bitcoin is outperforming other cryptocurrencies, and investors should consider holding their assets in Bitcoin.

When Bitcoin Dominance is toping out and falling, it means that altcoins are outperforming Bitcoin, and investors should consider holding their assets in select altcoins.

An Ideal Example

Below we can see a series of charts for the price of 1INCH. First on it’s usdollar price on it’s own, in the second chart we see 1INCH usdollar price vs BTC price usdollar price - and it’s easy to see that Bitcoin was the stronger market.

But it’s not until we look at the 1INCH/BTC price vs the BTC usdollar price that we can really see the difference in performance of these to assets in the past short while.

1inch/usd price

but if you compare to the price move in BTC, we can see that 1INCH did not perform as well as bitcoin.

And this difference is highlighted when we look at the 1INCH/BTC chart vs Bitcoin.

HODLING the Correct Asset

These three charts demonstrate the importance of reading the chart patterns to hold the correct asset at the right time.

While a position in 1INCH would have made modest gains vs usdollar, bitcoin made far stronger gains - which we can see most clearly by comparing the ALT/BTC pairs against the price of Bitcoin in the background.

Three States of Altcoin Season

Altcoin Season tells us we should be prepared to hold our assets in one of three forms.

Bitcoin Dominance can help us with a vital rule of thumb, yet it doesn’t provide the specific answers we need about which coins to hold, and when.

That’s where the altseason copilot comes into play - letting us look inside BTC.D

1. Bitcoin Dominance Rising and Bitcoin price dropping: Hold Fiat

2. Bitcoin Dominance Rising and BTC Price Rising: Hold Bitcoin

3. Bitcoin Dominance Dropping and BTC Rising or Sideways: Hold Altcoins

Altcoin Season: What is it and How Does it Work?

Altcoin Season refers to a period in the cryptocurrency market when altcoins outperform Bitcoin. This season is characterized by a surge in demand for altcoins, leading to significant price appreciation. During AltSeason, investors can increase their profits holding their assets in select altcoins as opposed to Bitcoin or Fiat.

Altcoin Season occurs for a variety of reasons, including increased adoption of cryptocurrency, new technological advancements, and positive media coverage. Investors should note that Altcoin Season is a wild period. Prices can and do fluctuate significantly without warning. It is therefore essential to approach Altcoin Season as the extremely dangerous activity that it is.

Leveraging Bitcoin Dominance during Altcoin Season

While Bitcoin Dominance is a vital rule of thumb, it does not provide specific answers about which coins to hold during Altcoin Season. To address this issue, investors can use the AltSeason CoPilot to look inside Bitcoin Dominance and identify which altcoins are setting up for our trading signal.

The AltSeason CoPilot team analyzes the charts to provide a daily breakdown of the performance of individual altcoins. This Daily Action Matrix helps investors to quickly identify which altcoins are crossing the action zones of our trend following trading plan. Investors can then plan to position their funds and calculate trading risks for each altcoin investment that are trending well and avoiding those that are not.