Bitcoin Dominance defines the percentage of the total crypto market value that is comprised of Bitcoin. Because Bitcoin is the reserve currency of the crypto ecosystem, its share of the market paints a clear picture of trader sentiment and risk appetite.
The Four Dominance Scenarios
1. BTC Price UP + BTC.D UP: Bitcoin is soaring and dragging the market with it, but altcoins are losing value against BTC. Safest place to be is Bitcoin.
2. BTC Price DOWN + BTC.D UP: The market is crashing, but altcoins are crashing much harder than Bitcoin. Flight to safety.
3. BTC Price UP + BTC.D DOWN: Altcoin Season. Altcoins are pumping harder and faster than Bitcoin.
4. BTC Price DOWN + BTC.D DOWN: Very rare. Usually indicates a rotation into stablecoins or a massive sell-off where Bitcoin dumps harder than illiquid altcoins.