The word “Dominance” generally means power and influence on others. Bitcoin Dominance also refers to the extent which Bitcoin dominates the cryptocurrency market. As BTC is the largest digital currency in terms of market cap, checking such measure can help users analyze total market.
Generally, in order to calculate Bitcoin dominance you can divide its market cap by total market capital. But an easier way to do so is to use Bitcoin dominance chart on Tradingview website. You can watch it by searching “Market Cap BTC Dominance”. BTC Dominance is shown in percentage.
One of the most important use cases of Bitcoin dominance analysis is to recognize Alt season. In the first years of BTC introduction, the number of altcoins was limited and BTC Dominance was around % 100. Then it gradually decreased over time as the number of coins increased. By introduction of Ethereum and ERC-20 tokens this was intensified. Analysts interpret BTC Dominance lowering as Alt season. That’s because altcoins could gradually gain more dominance.
Note that BTC dominance in comparison to Altcoins is not affected by bullish or bearish trend of market. For example, if BTC value decreases by %50 but Altcoins prices decline more than that, Bitcoin will remain dominant. Furthermore, Dominance does not represent a crypto value. Remember when BTC was the only crypto in the world. It was fully dominant but worth less than $10. Therefore, this is only a tool which provides insight about market evolution.