I often get asked what BTC dominance is and why it’s important for traders. Today I will share my experience about this indicator because it truly has a significant impact on how you should manage your altcoin portfolio.

Simply put, what is BTC dominance? It is the percentage of Bitcoin’s market capitalization relative to the total cryptocurrency market capitalization. If Bitcoin has a market cap of $9 billion and the entire market is $15 billion, then DOM = 60%. This number reflects Bitcoin’s dominance over altcoins. Currently (May 2026), this indicator is at 57.57%, which is quite an increase compared to the 50-55% range a few years ago.

Why is BTC dominance important? Because Bitcoin is considered the “core currency” of the entire industry. Most people have to go through Bitcoin or USDT to enter the market, and when altcoins crash, they often run back to Bitcoin to preserve their capital. This creates a very close relationship between Bitcoin and the rest of the market.

I have observed four main scenarios in the market. The best scenario is when Bitcoin rises strongly and pulls all altcoins up — at this time, market confidence is high, and big players pour money into both Bitcoin and other tokens. But more often, I see Bitcoin rising while altcoins fall, as funds flow from altcoins into Bitcoin to take profits. The third scenario is when Bitcoin drops, dragging the entire market down — this is when people panic and sell off. Finally, sometimes Bitcoin moves sideways while altcoins start to rise, which is the “altseason” phase lasting 1-2 years.

Looking at history, in 2016 Bitcoin accounted for over 90% of the market cap because Ethereum and other major projects didn’t exist yet. 2017 was a turning point when ICOs exploded, and DOM dropped to 35% because people bought ETH to participate in ICOs. But when Bitcoin hit $20,000 at the end of 2017, DOM recovered to 65%. Then, from 2018 to early 2020, DOM fluctuated between 33% and 50%. Later, in 2021, as Bitcoin rose from $3,800 to $41,000, DOM surged close to 74%.

So, when BTC dominance increases, what should you do? If DOM rises along with a strong Bitcoin price increase, it’s a sign of strong confidence — traders sell altcoins to buy Bitcoin. At this point, altcoins will find it hard to rise, but high-quality projects with real value will still prove themselves. I recommend holding good foundational altcoins with solid products, but absolutely avoid chasing prices too high. If DOM increases but Bitcoin’s price drops, altcoins will fall even harder, and you should move to USDT to avoid heavy losses.

Conversely, when DOM decreases and Bitcoin rises, most altcoins will outperform Bitcoin — this is the beginning of altseason. If DOM drops while Bitcoin also declines, you need to carefully observe capital flows, because altcoins may fall along with Bitcoin but could rebound strongly afterward.

Besides BTC dominance, you should also monitor other indicators like TOTAL, TOTAL2, DEFI, USDT.D to get a comprehensive picture. That’s why many newcomers to the market often get wrecked — they only look at Bitcoin’s price and forget to track these indicators. Practical experience and understanding capital flow are the keys to avoiding market traps.