Bitcoin dominance
Bitcoin Dominance: A Beginner's Guide
Welcome to the world of cryptocurrency! You've likely heard about Bitcoin, but what about "Bitcoin Dominance"? This guide will explain what it is, why it matters, and how you can use it to inform your cryptocurrency trading strategies. This is for absolute beginners, so we'll keep things simple.
What is Bitcoin Dominance?
Bitcoin Dominance (often shortened to BTC Dominance) is a measure of Bitcoin’s market capitalization relative to the *total* market capitalization of all cryptocurrencies. Think of it like this: imagine the entire crypto market is a pie. Bitcoin Dominance tells us what slice of that pie belongs to Bitcoin.
- Market Capitalization* is simply the total value of all coins of a specific cryptocurrency. You calculate it by multiplying the current price of one coin by the total number of coins in circulation.
For example:
- If Bitcoin's price is $30,000 and there are 19.5 million Bitcoins in circulation, Bitcoin's Market Cap is $30,000 * 19,500,000 = $585 billion.
- If the total value of *all* cryptocurrencies combined is $1.2 trillion, then Bitcoin Dominance is ($585 billion / $1.2 trillion) * 100 = 48.75%.
This means Bitcoin represents roughly 48.75% of the entire cryptocurrency market.
You can track Bitcoin dominance on websites like CoinMarketCap and CoinGecko.
Why Does Bitcoin Dominance Matter?
Bitcoin Dominance is important because it can give you clues about the overall health and direction of the crypto market. It's a useful indicator, but *not* a perfect one. Here's how it can be interpreted:
- **Rising Dominance:** When Bitcoin Dominance goes up, it usually means Bitcoin is outperforming other cr
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