What is Bitcoin Dominance?
Bitcoin is the first digital and decentralized cryptocurrency. Bitcoin is a type of currency that is based on and survives the rise in value of other currencies. Hence it is a coin that can be considered as one of the most respected cryptocurrencies in the world. Because one of the most digital fun currencies is Bitcoin which has a huge market capitalization. We can see how Bitcoin has a huge impact on the entire crypto market when Bitcoin price fluctuates with altcoins. Bitcoin dominance measures the percentage of the cryptocurrency market that can be attributed to Bitcoin. Bitcoin Dominance plays the most important role behind this so today I will discuss Bitcoin Dominance with you. So let's begin:
Bitcoin dominance is a ratio. Which is basically the ratio between the market capitalization of Bitcoin and the total market cap of the entire cryptocurrency market. Let's give an example to understand the point. Suppose the current market value of Bitcoin is 80 million dollars. And the total market cap of the entire cryptocurrency market in the market is currently $100 million. So if we divide 80 million dollars by 100 million dollars i.e. calculate the ratio then we get 80 percent or 0.80 dominance of Bitcoin. It gives a sense of Bitcoin's value compared to other cryptocurrencies and is often used by investors and traders to help them make better investment decisions.
To determine the dominance of Bitcoin we must know about the total market capitalization of Bitcoin. Then you need to know the total market cap of all cryptos in the market. If we can figure out these two values, we can easily determine Bitcoin dominance by dividing the total market capitalization of Bitcoin by the market cap of all other cryptocurrencies. Bitcoin Dominance Index can be easily arrived at by following formula:
Bitcoin dominance = market cap of BTC / market cap of all other cryptocurrencies
However, while Bitcoin Dominance is calculated according to the above rules, there are some exceptions such as some traders who use a variant of Bitcoin Dominance called the Real Bitcoin Dominance Index. Instead of directly Bitcoin and the market cap of unique coins, it only considers coins that rely on a proof of work consensus process. The rationale for this approach is that the Real Bitcoin Dominance Index is committed to tracking the movement of coins. And how is it determined that they have the potential to be used as decentralized means of exchange in the future? However, in this case the market cap of Bitcoin is divided by the market cap of Bitcoin and other PoW cryptocurrencies instead of the market cap of all cryptocurrencies to determine real Bitcoin dominance. The following formula is used to calculate the Real Bitcoin Dominance Index.
Real Bitcoin Dominance Index = Bitcoin Market Cap / (Market Cap of BTC + Market Cap of Other PoW Cryptocurrencies)
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Bitcoin dominance is well described.I look forward to more good articles from you in the future.
Thanks for your nice feedback
Good to know how we can calculate market dominance. I had seen it before. But in this time i din't calculate this. Thanks for this post.
Its my pleasure. Thanks
Your discussion is very good, you talk about Bitcoin Dominance here and explain how it is done which was unknown to me. Good luck to you.
Glad to know you found something out, thank you.
Bitcoin Supremacy, an essential statistics in the crypto globe, actions Bitcoin's market cap versus the overall cryptocurrency market. It overviews capitalists in comprehending Bitcoin's impact. Some investors utilize a variation called the Real Bitcoin Dominance Index, concentrating exclusively on proof-of-work coins, to assess Bitcoin's real supremacy out there.
We should all know about Bitcoin dominance because it often causes the prices of other coins to fluctuate.
Indeed. Thanks for the response
I have a lot of experience with Crypto Currency, but no experience with Bitcoin Dominance, however I got some experience from you.
Good to know that you have learned something about Bitcoin Dominance from here.