Imagine the entire crypto market as a pizza. 

BTC dominance tells you how big the slice of Bitcoin is compared to the rest of the pizza (altcoins). For example, if BTC dominance is 50%, that means Bitcoin accounts for half of the entire crypto market’s value, while the other half is divided among thousands of altcoins.

When Bitcoin takes center stage, it captures most of the market’s attention (and money). 

But when people start feeling confident or adventurous, they move into altcoins, creating what we know and love as “alt season”—that magical time when altcoins explode in value, sometimes making 10x, 20x, or even 100x gains.

But how do you know when this shift is coming? The answer lies in a key technical indicator called Bitcoin Dominance (BTC.D).

Let’s break down Bitcoin dominance, how it works, and how you can use it to predict alt season and ride those juicy waves of altcoin gains.

What is Bitcoin Dominance (BTC.D)?

Bitcoin dominance is the percentage of the total cryptocurrency market cap that belongs to Bitcoin. It’s a simple ratio:

BTC Dominance (%) = (Bitcoin Market Cap / Total Crypto Market Cap) × 100

Think of the crypto market as a $100 billion pie. If Bitcoin’s market cap is $60 billion, BTC dominance is 60%. The remaining $40 billion belongs to all the altcoins combined.

Why It Matters

  • High BTC Dominance (e.g., 60%+):
     Bitcoin is capturing most of the market’s capital. This usually means investors are playing it safe or there’s a lack of confidence in altcoins.
  • Low BTC Dominance (e.g., 40% or lower):
     More money is flowing into altcoins. This often signals higher risk appetite and can be a precursor to a major altcoin rally.

How Bitcoin Dominance Works as an Indicator of Alt Season

Bitcoin dominance doesn’t just show you how much market share Bitcoin holds—it tells a story about investor behavior and market trends. Here’s how the cycle typically plays out:

  1. Bitcoin Rally Phase:
    • Bitcoin surges, attracting new and existing capital.
    • BTC dominance rises as altcoins are sidelined or sold off to fuel Bitcoin’s run.
  2. Bitcoin Stabilizes or Peaks:
    • Bitcoin reaches a local top or consolidates.
    • Investors begin taking profits and look for opportunities with higher potential gains.
    • BTC dominance starts to decline.
  3. Altcoin Rally (Alt Season):
    • Money flows into altcoins, causing their prices to surge.
    • BTC dominance drops significantly.
    • Many altcoins outperform Bitcoin, often delivering exponential returns.
  4. Profit-Taking and Reversion:
    • Traders cash out of altcoins back into Bitcoin or fiat.
    • BTC dominance stabilizes or starts to rise again as the market cycle resets.

Historical Patterns of BTC Dominance and Alt Season

To understand how BTC dominance predicts alt season, let’s look at some historical examples:

  1. 2017 Bull Run:
    • BTC dominance dropped from 87% in January 2017 to around 35% in January 2018.
    • During this period, altcoins like Ethereum, XRP, and Litecoin saw explosive gains.
  2. 2021 Bull Run:
    • BTC dominance fell from around 70% in January 2021 to about 40% in May 2021.
    • Altcoins like Binance Coin (BNB), Solana (SOL), and Cardano (ADA) surged to all-time highs.

These patterns show that when BTC dominance falls sharply, altcoins tend to have their moment in the spotlight.

How to Use BTC Dominance to Predict Alt Season

Key Metrics to Watch

  1. Support and Resistance Levels:
    • Historically, 40% BTC dominance has been a key support level. When BTC dominance breaks below this level, it often signals the beginning of alt season.
    • On the flip side, 60% BTC dominance tends to act as resistance, indicating that Bitcoin is dominating the market.
  2. Moving Averages (MA):
    • Keep an eye on the 50-day and 200-day moving averages on the BTC.D chart. When BTC dominance falls below these averages, it can signal a shift towards altcoins.
  3. Relative Strength Index (RSI):
    • A high RSI for BTC.D (above 70) may indicate Bitcoin is overbought, and a shift towards altcoins is coming.
    • A low RSI (below 30) suggests Bitcoin is oversold, and a Bitcoin rally could be on the horizon.

Practical Strategy for Alt Season

  1. Monitor BTC Dominance:
    • Track BTC.D on platforms like TradingView. Look for consistent downtrends in BTC dominance.
  2. Diversify During Falling BTC Dominance:
    • When BTC dominance starts dropping, allocate a portion of your portfolio to strong altcoins with solid fundamentals and promising use cases.
    • Diversify across different sectors: DeFi, Layer 1 blockchains, AI, and Metaverse projects.
  3. Take Profits Smartly:
    • Remember, alt season doesn’t last forever. Once BTC dominance shows signs of stabilizing or rising, consider rotating profits back into Bitcoin or stablecoins to lock in gains.

Where is BTC Dominance Today?

As of December 17, 2024, Bitcoin’s dominance in the cryptocurrency market stands at approximately 54.86%. This means that Bitcoin accounts for over half of the total market capitalization of all cryptocurrencies combined.

This level of dominance indicates that Bitcoin continues to be the leading force in the crypto market, attracting significant investment and attention. However, it’s important to note that Bitcoin’s dominance has seen fluctuations throughout the year, ranging between 49% and 57%. 

These shifts reflect changing investor sentiments and the dynamic nature of the cryptocurrency landscape. Staying up to date on this trend can help you spot alt season before the gains are locked in.

Conclusion

Bitcoin dominance is one of the most powerful tools for predicting the flow of capital in the crypto market. When BTC dominance starts to fall, it’s like a starting gun for alt season—a signal that the market is ready for higher-risk, higher-reward plays in altcoins.

By monitoring BTC dominance closely and understanding its relationship with altcoins, you can better position yourself to ride the waves of market cycles, secure profits, and make the most out of each alt season.

Stay sharp, stay decentralized, and let the charts guide your journey to financial freedom.

May the gains be ever in your favor, fam! 🚀

MichaelHeadshot
Michael Hearne

I’m a serial entrepreneur, and I’ve spent the last 15 years taking companies to new levels, breaking the boundaries of innovation, and triumphing over adversity. My wife, Victoria, and I started our first business in a 2-bed/1-bath apartment with 4 kids, next to a crackhouse. We pushed through setbacks and failures to lift our family out of poverty. Along the way, I’ve learned that my struggles make me stronger. And that being the best version of me is the greatest contribution I can give to the world. It makes me a better husband, and father. It improves my health, energy, and my capacity to serve others. And it has allowed me to build businesses that make the world a better place. Today, I work for passion, to make a difference, and solve real problems in the real world through my business ventures. This little site is where I share the things I’ve learned, and am still learning, on my journey.